BofA Downgrades Self-Storage REITs, Impacting Stocks
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3d ago
0mins
Source: seekingalpha
- Rating Downgrade Impact: BofA Securities downgraded Public Storage (PSA) from Buy to Neutral, lowering the price target from $336 to $310, which led to a 1.79% drop in PSA's stock price to $283.34 during Thursday morning trading, reflecting market concerns over future profitability.
- Revenue Growth Slowdown: BofA highlighted that despite PSA's fundamentals having bottomed, there are no meaningful catalysts to drive improvement, and limited rental revenue growth is expected in 2026, particularly due to pricing restrictions related to the Los Angeles fires affecting 16.2% of same-store net operating income.
- EXR Rating Downgrade: Extra Space Storage (EXR) was downgraded to Underperform with a price target cut from $163 to $143, as BofA noted a lack of clear signs of demand recovery, which could lead to guidance falling short of market expectations and increase the risk of near-term negative revenue surprises.
- Divergent Market Reactions: While BofA lowered its 2026 same-store revenue growth assumptions by approximately 30 basis points and cut estimates by about 1.3% for both self-storage REITs, some analysts still rate PSA as a Buy, whereas EXR faces mixed opinions, with Quant rating it as Hold.
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Analyst Views on PSA
Wall Street analysts forecast PSA stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for PSA is 311.58 USD with a low forecast of 276.00 USD and a high forecast of 349.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
14 Analyst Rating
5 Buy
9 Hold
0 Sell
Moderate Buy
Current: 282.820
Low
276.00
Averages
311.58
High
349.00
Current: 282.820
Low
276.00
Averages
311.58
High
349.00
About PSA
Public Storage is a real estate investment trust. Its principal business activities include the ownership and operation of self-storage facilities that offer storage spaces for lease, generally on a month-to-month basis, for personal and business use, and other related operations, such as tenant reinsurance, merchandise sales, third party management, and bridge lending to third-party self-storage owners, as well as the acquisition and development of additional self-storage space. Its Self-Storage Operations segment includes the aggregated rental operations from the self-storage facilities it owns from same store facilities, acquired facilities, newly developed and expanded facilities, and other non-same store facilities. Its Ancillary Operations segment includes the combined operations of its tenant reinsurance, merchandise sales, and third-party property management operating segments. It owned interests in over 3,085 self-storage facilities located in 40 states in the United States.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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BofA Downgrades Self-Storage REITs, Impacting Stocks
- Rating Downgrade Impact: BofA Securities downgraded Public Storage (PSA) from Buy to Neutral, lowering the price target from $336 to $310, which led to a 1.79% drop in PSA's stock price to $283.34 during Thursday morning trading, reflecting market concerns over future profitability.
- Revenue Growth Slowdown: BofA highlighted that despite PSA's fundamentals having bottomed, there are no meaningful catalysts to drive improvement, and limited rental revenue growth is expected in 2026, particularly due to pricing restrictions related to the Los Angeles fires affecting 16.2% of same-store net operating income.
- EXR Rating Downgrade: Extra Space Storage (EXR) was downgraded to Underperform with a price target cut from $163 to $143, as BofA noted a lack of clear signs of demand recovery, which could lead to guidance falling short of market expectations and increase the risk of near-term negative revenue surprises.
- Divergent Market Reactions: While BofA lowered its 2026 same-store revenue growth assumptions by approximately 30 basis points and cut estimates by about 1.3% for both self-storage REITs, some analysts still rate PSA as a Buy, whereas EXR faces mixed opinions, with Quant rating it as Hold.
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- Earnings Impact Assessment: Market performance has a significant impact on Public Storage's profitability, and if demand fails to recover, it could lead to a decline in earnings, thereby affecting shareholder returns.
- Market Environment Monitoring: Goldman Sachs' analysis underscores the importance of closely monitoring market dynamics, especially in the context of weak demand, as companies need to adopt strategies to mitigate potential earnings pressure.
- Investor Confidence Challenge: Given the pessimistic outlook on future demand, investors may reassess their investment strategies regarding Public Storage, potentially impacting its stock performance and overall market confidence.
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See More
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- Job Data Expectations: The U.S. is expected to add 60,000 jobs in January, up from 50,000 in December, which could influence the Fed's monetary policy direction amidst ongoing economic uncertainty.
- Inflation Metrics Analysis: The January Consumer Price Index is projected to rise by 0.29% month-over-month and 2.5% year-over-year, showing improvement but still falling short of the Fed's 2% target, potentially affecting investor rate expectations.
- Market Reaction and Risks: Recent signs of labor market weakness, including an ADP report indicating only 22,000 new private sector jobs, may heighten expectations for further Fed rate cuts, although investors remain optimistic about economic resilience.
- Stock Market Rotation Trend: A significant rotation within the stock market is underway, with the Dow Jones Industrial Average rising over 2% this week, reflecting confidence in economic recovery, despite ongoing weakness in tech stocks.
See More
BofA Downgrades Self-Storage REITs, Impacting Stocks
- Rating Downgrade Impact: BofA Securities downgraded Public Storage (PSA) from Buy to Neutral, lowering the price target from $336 to $310, which led to a 1.79% drop in PSA's stock price to $283.34 during Thursday morning trading, reflecting market concerns over future profitability.
- Revenue Growth Slowdown: BofA highlighted that despite PSA's fundamentals having bottomed, there are no meaningful catalysts to drive improvement, and limited rental revenue growth is expected in 2026, particularly due to pricing restrictions related to the Los Angeles fires affecting 16.2% of same-store net operating income.
- EXR Rating Downgrade: Extra Space Storage (EXR) was downgraded to Underperform with a price target cut from $163 to $143, as BofA noted a lack of clear signs of demand recovery, which could lead to guidance falling short of market expectations and increase the risk of near-term negative revenue surprises.
- Divergent Market Reactions: While BofA lowered its 2026 same-store revenue growth assumptions by approximately 30 basis points and cut estimates by about 1.3% for both self-storage REITs, some analysts still rate PSA as a Buy, whereas EXR faces mixed opinions, with Quant rating it as Hold.
See More
Wall Street Analysts Adjust Ratings on Key Stocks
- Rating Downgrade: Wolfe Research analyst Andrew Rosivach downgraded Public Storage (NYSE:PSA) from Outperform to Peer Perform, reflecting a cautious outlook on the company's future growth, with shares closing at $282.63 on Friday.
- Price Target Adjustment: Morgan Stanley analyst Hamza Fodderwala downgraded Varonis Systems Inc (NASDAQ:VRNS) from Overweight to Equal-Weight and lowered the price target from $44 to $41, indicating concerns about its profitability, with shares closing at $34.95 on Friday.
- Rating Change: Canaccord Genuity analyst Brian McNamara downgraded Lifetime Brands Inc (NASDAQ:LCUT) from Buy to Hold and cut the price target from $4 to $3.5, reflecting a conservative outlook on its market performance, with shares closing at $3.89 on Friday.
- Rating and Price Target Adjustment: DA Davidson analyst Peter Winter downgraded BOK Financial Corp (NASDAQ:BOKF) from Buy to Neutral while raising the price target from $125 to $135, indicating confidence in its future stability, with shares closing at $132.12 on Friday.
See More
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- EPS Revision Grades: Digital Realty Trust (DLR) and Prologis (PLD) both received an A+ rating from analysts, indicating strong confidence in their near-term performance, which may attract more investor interest.
- Market Confidence Boost: Weyerhaeuser (WY) and Crown Castle (CCI) also earned an A rating, suggesting that market expectations for their earnings are improving, potentially driving their stock prices higher.
- Investor Attention: Simon Property Group (SPG) and Host Hotels & Resorts (HST) received A ratings as well, reflecting analysts' optimistic outlook on their future performance, which could draw more institutional investors' attention.
- Overall Trend: Kimco Realty (KIM), Public Storage (PSA), and Welltower (WELL) all achieved A ratings, indicating a positive trend across the real estate sector, potentially providing more investment opportunities for investors.
See More
Goldman Sachs Sees Limited Demand Catalysts for Public Storage in 2026, Market Performance Impacting Earnings
- Demand Outlook: Goldman Sachs anticipates limited demand catalysts for Public Storage in 2026, indicating that the market environment may pose challenges to the company's future revenue growth, particularly amid an economic slowdown.
- Earnings Impact Assessment: Market performance has a significant impact on Public Storage's profitability, and if demand fails to recover, it could lead to a decline in earnings, thereby affecting shareholder returns.
- Market Environment Monitoring: Goldman Sachs' analysis underscores the importance of closely monitoring market dynamics, especially in the context of weak demand, as companies need to adopt strategies to mitigate potential earnings pressure.
- Investor Confidence Challenge: Given the pessimistic outlook on future demand, investors may reassess their investment strategies regarding Public Storage, potentially impacting its stock performance and overall market confidence.
See More
