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Raymond James analyst Jonathan Hughes upgraded CubeSmart (NYSE:CUBE) to Strong Buy following the recent selloff.
The analyst also cut the price target to $52.00 from $60.00 on CUBE stock to reflect multiple compression.
“Despite the positive fundamental updates, the self storage REITs have not been spared in the recent sell-off and have actually been the among the largest underperformers vs. the REIT average QTD (-740 bp). We believe the recent weakness is due to a combination of profit-taking – self storage remains the best-performing REIT sector in the post-pandemic world – and fears over customer behaviors – notably move-outs and rents – returning to more normal levels, though we have seen little change through April,” Hughes said in a client note.
CUBE is a top pick at Raymond James, followed by Public Storage (NYSE:PSA). Overall, the analyst remains bullish on the sector despite the recent pullback.
“[We] believe the declining new supply impact – that has likely declined further given the recent shift in macroeconomic and capital market conditions – creates a scenario where fundamentals can surpass expectations for the next several years. That said, our revised earnings estimates are not as optimistic as they would have been several weeks ago as we now incorporate some impact from a potential consumer-driven recession,” the analyst added.
CUBE stock price is up 3.3% heading into the New York open today.
