Analysts Just Trimmed Price Targets for These 5 Stocks

03. Extra Space Storage Inc. (NYSE:EXR)

Price Reaction after the Price Target Cut: -4.95 (-3.88%)

Extra Space Storage Inc. (NYSE:EXR) belongs to the real estate investment trust (REIT) sector, specifically within the self-storage REIT industry. The company specializes in owning and operating self-storage facilities across the United States. On September 21, Morgan Stanley lowered its price target for Extra Space Storage Inc. (NYSE:EXR) shares from $145.00 to $115.00, signifying a reduction in their outlook for the stock’s potential value. Morgan Stanley has also maintained its “Underweight” rating for EXR, indicating a bearish stance on the stock, suggesting it may underperform relative to other investments. Following this update, Extra Space Storage’s stock is trading at $122.58, reflecting a 3.9% decline in response to Morgan Stanley’s target price adjustment. This news highlights the cautious sentiment among analysts regarding the performance of self-storage REITs like Extra Space Storage Inc. (NYSE:EXR).

Baron Real Estate Fund made the following comment about Extra Space Storage Inc. (NYSE:EXR) in its second quarter 2023 investor letter:

“Following its pending merger with Life Storage, Inc. which is expected to close late in 2023, Extra Space Storage Inc. (NYSE:EXR), a best-in-class self-storage REIT, will be the largest self-storage operator with a $46 billion self-storage operating portfolio. In the most recent quarter, the shares declined because rent growth is moderating from its strong pace of the last few years.

Though 2023 may be a transition year for Extra Space as growth retraces to a more sustainable run-rate and the management team prepares to incorporate Life Storage, we remain optimistic about the long-term prospects for the company and believe the current price of its shares reflects a good portion of this anticipated transition.

We believe Extra Space’s management team is excellent. Over the last decade, management has delivered strong occupancy gains, rent growth, and expense control that has led to a cost-of-capital advantage relative to its peers. Management has capitalized on its cost-of-capital advantage relative to its peers by tripling its owned self-storage count since 2010. We believe the management team will continue to create tremendous value for shareholders and believe the long-term growth opportunity for the company remains strong.”