Broker snap: Rising occupancy looks good at Big Yellow

13th Jan 2011 13:12

Big Yellow's bid to concentrate on filling space and increasing occupancy has attracted brokers Peel Hunt and Matrix, as the self-storage group is expected to vastly expand its income as a resultThe third quarter statement reported occupancy to have stood relatively still during the period. This is a "commendable result given the last quarter of the calendar year is traditionally the quietest reflecting the seasonal effect of the self storage industry as well as the particularly tougher housing market," says Peel analyst Matthew Churstain.Occupancy in the period was around 2% lower, but the group has reduced development in order to fill more space and increase occupancy. "This strategy is working and may lead to, over the medium term, a 40% increase in gross revenues and, at a minimum, a doubling in earnings," adds Churstain.Peel Hunt raises its target price from 424p to 438p, and is a 'buyer' of the stock.Matrix says while the current share price looks good value, "the real attraction lies, as we have highlighted before, in the potential growth in income as occupancy rises and the dividend grows," said analyst Miranda Cockburn."We see just over 12% upside to our target of 379p and our happy to retain our 'buy' rating," said Cockburn.