Back to top

Image: Bigstock

Extra Space Storage (EXR) Soars 3.7%: Is Further Upside Left in the Stock?

Read MoreHide Full Article

Extra Space Storage (EXR - Free Report) shares soared 3.7% in the last trading session to close at $160.17. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 7.6% loss over the past four weeks.

This increased investor optimism can be attributed to the news of Life Storage’s (LSI) acquisition by Extra Space Storage in an all-stock transaction. The move will result in the combined company becoming the largest storage operator in the country. The combined entity is poised to benefit from the enhanced size, scale, diversification and synergies.

The transaction is currently expected to close in the second half of 2023 and is subject to Extra Space and Life Storage shareholders’ nod and the satisfaction of other customary closing norms. Within the first year of closing, the transaction is expected to be accretive to core funds from operations (FFO) per share and is also expected to be leverage neutral.

Per the agreement terms, shareholders of Life Storage will get 0.8950 of an Extra Space share for each share they own. Based on Extra Space's share price close on Mar 31, 2023, this represents a total consideration of roughly $145.82 per share.

This self-storage facility real estate investment trust is expected to post quarterly funds from operations (FFO) of $2.05 per share in its upcoming report, which represents a year-over-year change of +2%. Revenues are expected to be $513.94 million, up 15.9% from the year-ago quarter.

FFO and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in FFO estimate revisions are strongly correlated with near-term stock price movements.

For Extra Space Storage, the consensus FFO per share estimate for the quarter has been revised 1.7% higher over the last 30 days to the current level. And a positive trend in FFO estimate revision usually translates into price appreciation. So, make sure to keep an eye on EXR going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Extra Space Storage belongs to the Zacks REIT and Equity Trust - Other industry. Another stock from the same industry, Healthpeak , closed the last trading session 0.2% lower at $21.68. Over the past month, PEAK has returned -10.2%.

For Healthpeak, the consensus FFO per share estimate for the upcoming report has changed +0.7% over the past month to $0.42. This represents a change of -2.3% from what the company reported a year ago. Healthpeak currently has a Zacks Rank of #3 (Hold).


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Extra Space Storage Inc (EXR) - free report >>

Published in