Goldman Sachs Lifts Public Storage To Buy

In a report published Tuesday, analysts at Goldman Sachs upgraded Public Storage PSA from Neutral to Buy. The price target was raised from $201 to $220. The analysts expect the company's earnings growth to accelerate going forward. Goldman Sachs believes that the stock deserves to trade at a 12 percent premium, given that the company is expected to witness a five-year growth rate of 50 percent, which is significantly higher than the sector average. The analysts also believe that the weak earnings growth posted for the past few quarters was more due to temporary factors related to the balance sheet rather than the company's fundamentals. "Internal growth should remain outstanding due to a combination of excellent fundamentals and the continued stabilization of recently purchased and developed properties," the analysts said. The analysts believe that Public Storage could also spur external growth by using its debt, especially with regard to hedging its Euro equity exposure. "The above factors do not appear to be anticipated by investors," the analysts stated, adding that "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."