Extra Space Storage downgraded at Goldman Sachs on 'no near term catalyst'

Extra Space Storage (EXR) experienced a stock price decline following a downgrade from Goldman Sachs, attributed to a lack of immediate catalysts despite increasing demand for self-storage solutions.

Goldman Sachs noted that the recovery in storage demand has been slower than expected, leading to reduced move-in rates and lower revenue growth forecasts.

Analysts predict an average annual funds from operations (FFO) growth of only 2.5% from 2025 to 2027, prompting a downgrade of EXR from Buy to Neutral with a price target of $146.00.

While Goldman Sachs holds a neutral stance, some other analysts continue to rate Extra Space Storage as a Buy, indicating differing opinions within the market.

Recommendation Rating: Neutral

Extra Space Storage (NYSE:EXR) has seen a decline in its stock price following a downgrade from Goldman Sachs, primarily due to the lack of immediate catalysts, despite an upward trend in demand for self-storage solutions. In pre-market trading on Thursday, the stock was down by 1.17%, reaching a price of $138.01.

According to Goldman Sachs, the recovery in storage demand has not occurred as swiftly as anticipated. This slower rebound has contributed to a reduced move-in rate and less significant revenue growth than expected.

Goldman Sachs analysts, Caitlin Burrows, Jeremy Kuhl, and Shailee Lnu, noted, "EXR is currently trading at 16.7 times next twelve months (NTM) funds from operations (FFO), representing a 2% discount relative to the REIT sector average, which historically has shown an 8% premium." They predict a lower growth profile moving forward, estimating that average annual FFO growth will be around 2.5% for the years 2025, 2026, and 2027.

The analysts concluded, "In the absence of a significant increase in earnings, we do not foresee a substantial improvement in EXR’s valuation multiple. Consequently, we have downgraded the stock to Neutral from Buy." Their 12-month price target for EXR stands at $146.00, which is based on a target AFFO multiple of 17.8 times for the fourth to eighth quarters, a slight increase from its current NTM AFFO multiple of 17.7 times.

This assessment from Goldman Sachs is consistent with a Quant Rating of Hold for the stock. However, various Seeking Alpha contributors and other Wall Street analysts maintain a Buy rating on Extra Space Storage.