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Highlights
- Price Target: Citi maintains a "buy" rating with a price target of AU$2.70.
- Expected Growth: Stable earnings growth predicted, driven by storage fee increases and occupancy stability.
- Cost Reductions: Finance costs expected to decline with lower interest rates and more cost-efficient funding.
Citi analysts have expressed optimism about National Storage REIT (ASX:NSR), reiterating a "buy" rating and setting a price target of AU$2.70. The self-storage provider is set to release its first-half FY2025 results in February, with expectations of continued stable growth in underlying earnings.
Growth Drivers
Citi attributes its positive outlook to ongoing rental growth in storage fees and stable like-for-like occupancy rates. This combination is expected to bolster earnings despite broader economic challenges.
Additionally, Citi highlights the potential for reduced finance costs as interest rates ease and the company adopts lower-cost funding sources. These financial efficiencies are likely to enhance National Storage’s profitability over the medium term.
Analyst Sentiment
According to LSEG data, National Storage has mixed sentiment among analysts:
- 4 of 9 analysts rate the stock as "buy" or higher.
- 4 analysts recommend "hold," while 1 suggests "sell."
- The median price target among analysts stands at AU$2.55, slightly below Citi's bullish forecast.
Market Performance
Despite Citi's optimistic stance, National Storage shares have underperformed this year. The stock is down 1.3% year-to-date, trailing the ASX Real Estate Index, which has posted a 5.3% gain over the same period.
