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Negative Outlook for National Storage Affiliates Amidst Declining Financial Metrics and High Debt Levels

Negative Outlook for National Storage Affiliates Amidst Declining Financial Metrics and High Debt Levels

Morgan Stanley analyst Ronald Kamdem maintained a Sell rating on National Storage Affiliates yesterday and set a price target of $30.00.

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Ronald Kamdem has given his Sell rating due to a combination of factors impacting National Storage Affiliates. The company’s core funds from operations (FFO) for the second quarter fell short of expectations by 3 cents, and the full-year guidance was revised downward to $2.20, which is 5% below the consensus estimate. Despite a slight year-over-year improvement in move-in rates, the same-store revenue and net operating income (NOI) continued to face challenges, with a decline of 3.0% and 6.1% respectively, showing little improvement during the peak leasing season.
Additionally, the full-year same-store revenue guidance was significantly reduced, and marketing expenses as a percentage of revenue increased. The payout ratio for adjusted funds from operations (AFFO) exceeded 100%, indicating potential sustainability issues. The report also highlights concerns about the timing of demand recovery, rent increases for existing tenants, and pricing for new tenants. These factors, combined with a reduced acquisition guidance and high debt levels, contribute to the negative outlook for the stock.

In another report released on July 23, Wells Fargo also maintained a Sell rating on the stock with a $35.00 price target.

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