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Big Yellow Group gets big upgrade from Morgan Stanley

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Heavyweight broker Morgan Stanley has upgraded self-storage specialist Big Yellow Group (LON:BYG) to 'equal weight' from 'underweight' and upped the target price by 155p to 240p.

Analyst Bianca Riemer puts the reasons for the bullish stance on evidence of growth in the London market, the firm's competitive position, and potential for growth.

Big Yellow provides storage for homes and business, with space ranging from units to warehouses.

"BYG derives over 70% of revenues from London stores, while over 70% of its vacancies are also in London, mainly in relatively new stores," said Riemer.

Moreover, the firm's £15 mln VAT reclaims should allow it to build the three remaining stores in its development pipeline, further increasing its London weighting, added the analyst.

"Overall occupancy has risen 25% in the last three years, despite an adverse economic climate.

"We had previously expected declines in BYG’s occupancy and rents, hence our UW rating. London self-storage space per capita remains less than 1/7th of the US, suggesting further growth potential."

Morgan Stanley's price target moves to 395p from 240p.

 

Quick facts: Big Yellow Group

Price: 1226 GBX

LSE:BYG
Market: LSE
Market Cap: £2.05 billion
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