Goldman Sachs boosted its rating on Public Storage (PSA) on Tuesday. Here’s what the move means for mutual fund investors.
Inside the Analyst Move
Goldman Sachs has raised its rating on Public Storage to “Sell” from “Neutral” and has boosted its price target from $187 to $201. This new price target suggest a 5% increase from the stock’s current price.
According to analyst Andrew Rosivach: “Our PSA upgrade is predicated on (1) best-in-class fundamentals for storage, (2) higher earnings growth, and (3) a more reasonable valuation since our February downgrade. We are increasing our 2015/2016 FFO estimates by 2%/3% and now believe the company can produce two-year growth of 10%, slightly above our short lease term coverage average. Since being added to the Americas Sell List on February 26, 2014, shares are up 12% vs. the S&P 500 +10% and the RMZ +18%.”
Leader in the Self Storage REIT Industry
Public Storage is the leader among self storage real estate investment trusts (REITs). However, at 22x 2015 earnings estimates, the stock is expensive for a REIT. The company’s 3% dividend yield is a decent source of income, but is below average compared to its peers.
For more information on real estate mutual funds, check out Beginner’s Guide to Real Estate Funds.
Mutual Funds to Watch
Investors interested in PSA may be interested in the funds listed below. These funds currently hold the largest stakes in the company.
| Symbol | Mutual Fund | Stake |
|---|---|---|
| VGSIX | Vanguard REIT Index | 6.26% |
| VTSMX | Vanguard Total Stock Market Index | 1.42% |
| FRESX | Fidelity Real Estate Investment Port | 0.92% |
The Bottom Line
The funds above offer investors a diverse group of holdings. Investors interested in PSA may also be interested in Sovran Self Storage (SSS) and Extra Space Storage (EXR).