In a note published Tuesday, Barclays revised its investment view on Safestore, lowering the recommendation from "overweight" to "equal weight" even as it increased the firm's price target by 18% to 870p from 740p. The brokerage said the move was driven by valuation concerns now that improving operating trends appear to be reflected in the stock's market value.
Safestore's shares traded lower following the announcement, down 2.7% at 06:22 ET (11:22 GMT).
By contrast, Barclays reinstated its "overweight" recommendation on rival Big Yellow Group and assigned a price target of 1200p to that stock.
Valuation and recent performance
Barclays said the market has largely priced in the positives for Safestore: better operating metrics, reduced earnings drag from development activity and an expectation of eventual earnings growth. "We believe the positives of improving operating metrics, lower development drag on earnings and ultimately earnings growth is now priced in" for Safestore, the brokerage wrote.
The bank noted that Safestore closed at 802.50p on February 9 and that a one-year forward FY26E earnings-per-share yield of 5.2% has compressed after strong share-price appreciation. Since the second quarter of 2025, Safestore has outperformed Big Yellow by 13% compared with 2% for Big Yellow, Barclays' analysts said.
Barclays observed that Safestore's share gains have been supported by recent operational updates showing signs of occupancy improvement, even as the company continues to record negative growth in revenue per available square foot.
Forecasts, guidance and development pipeline
Following Safestore's FY25 results, Barclays said it is confident that earnings have troughed. The brokerage trimmed its EPS forecasts by 4% to 9% across FY27E-29E, yet still expects what it described as a "healthy" 6.1% EPS compound annual growth rate over FY25-30E.
Analysts incorporated company guidance for a 3% to 6% increase in like-for-like cost of sales and factored in £1m to £2m in additional net finance costs for FY26E. Barclays also noted that the peak of Safestore's development activity appears to have passed: the firm's development pipeline now comprises 20 stores versus 31 at FY24.
Management has indicated that the dilutive effect on earnings from higher finance expenses should begin to ease from FY26E.
Macro context and demand drivers
Barclays linked the sector's improvement to better UK economic indicators. January Flash composite PMIs reached 53.9, the highest level since April 2024, while a labour PMI reading of 45.7 points to easing wage-inflation pressures. The bank also highlighted that UK mortgage approvals have strengthened since early 2024, which Barclays noted are a forward indicator for house moves. According to the Self Storage Association's 2025 UK annual report, house moves generate about 40% of domestic self-storage demand.
Big Yellow assumptions and positioning
For Big Yellow, Barclays made modest assumption changes, reducing its rate-growth forecasts to 2% per annum for FY26E-27E from 3% previously. The brokerage modelled occupancy growth of 0% for FY26E and 0.5% thereafter, producing a 5.4% EPS CAGR over FY25-30E with a 6.0% FY27E EPS yield as a starting point.
Barclays said it expects occupancy to improve, enabling continued top-line growth for Big Yellow. The analysts also pointed out that Big Yellow faces fewer near-term EPS headwinds because it has delivered fewer development sites relative to Safestore and competitor Shurgard, and it has the strongest leverage profile among the coverage group with net debt to EBITDA of 3.9x for FY26E.
Barclays maintained a "neutral" stance on the European Real Estate sector as a whole.
Research product mention
The note included a mention of an AI-driven stock selection product that evaluates Safestore alongside other companies using an array of financial metrics. It describes the tool as assessing fundamentals, momentum and valuation to identify attractive risk-reward opportunities across coverage, and highlights past notable winners.
Barclays' rating changes reflect a view that much of the recovery narrative for Safestore is already embedded in current share prices, while differentiated positioning and fewer development deliveries support a more positive stance on Big Yellow.