Goldman Sachs Sees Earnings Strength at Public Storage (PSA), Upgrades Stock to Buy

(Updated - May 12, 2015 8:35 AM EDT)

Goldman Sachs upgraded Public Storage (NYSE: PSA) from Neutral to Buy with a price target of $220.00 (from $201.00), suggesting upside of 13%. Analyst Andrew Rosivach thinks earnings are poised to accelerate, and he sees catalysts from earnings beats.

"Slow recent earnings growth appears a function of temporary balance sheet dislocation (including a temporary cash balance during most of 1Q15) that should subside over time. We believe the underlying fundamentals of storage are outstanding and that PSA’s large pool of non-same store assets could provide greater revenue growth than the market anticipates. Finally, we forecast earnings growth to accelerate while PSA has experienced a meaningful multiple contraction relative to other short lease term REITs," said Rosivach.

The analyst added, "Catalysts come in the form of earnings beats and possible euro denominated debt issuance. Our 2016 FFO estimate is 6.0% above consensus driven by strong same-store estimates (+6.7% for NOI in 2015/16); which does not include possible euro issuance, which could (add 1-3% to FFO for each $1 billion of matched acquisitions)."

For an analyst ratings summary and ratings history on Public Storage click here. For more ratings news on Public Storage click here.

Shares of Public Storage closed at $194.16 yesterday.

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