Berenberg raises target price on Safestore

Berenberg, which said this growth was yet to "meaningfully slow down, noted that through most of the period, it had taken a 'hold' stance on the stock as it believes the growth likely reflects brought-forward demand that could lead to subsequently falling occupancy as demand normalises, as well as the fact that its all-time high valuation reflected "an unattractive risk/reward ratio", given its near all-time high forward earnings multiple.

However, with shares up "materially" since its downgrade in June 2020, Berenberg said this view had "clearly been wrong".

"Now, as we enter a period of likely more muted occupancy growth, Safestore is proving its extraordinary pricing power; from this, we expect it to witness a successive year of double-digit like-for-like growth in full-year 2022, before returning to its prior circa 5-7% trajectory," said the analysts.

The German bank added that while it reckons near-term upside to its forecasts remains, it opted to potentially repeat its "mistake of 2021" and maintain its 'hold' rating on Safestore, as it believes the shares were fully valued at a roughly 26x 2023 price-to-earnings ratio - 20% above the average forward valuation for Safestore over the past five years.