CubeSmart (CUBE) PT Raised to $45 at Evercore ISI

Evercore ISI analyst Steve Sakwa raised the price target on CubeSmart (NYSE: CUBE) to $45.00 (from $43.00) while maintaining a In Line rating.

The analyst comments "Following CUBE’s earnings results last week, we updated our model and revisited our assumptions for FY24 & FY25. CUBE reported Q4 FFO of $0.70, which compared to consensus of $0.68 and our estimate of $0.67. The company reported NOI growth of 1.2% in the quarter which was better than our -2.6% estimate as revenue growth was 90bp higher than expected (+0.4% vs. of -0.5%) and better than the implied guide of -0.7% while expense growth was lower at -1.8% vs. our projection of +5.5%. Note that property taxes, which make up 35% of total op exp, were down 13.5% leading to a reduction Y/Y in overall expenses but creates a headwind for ’24 as highlighted by CUBE’s higher than expected expense growth. After updating our model, we improved our SS revenue growth forecast from -1.3% to -0.7% in FY24 but we also increased our assumption around expenses and as a result our FY24 core FFO estimate is down slightly from $2.62 to $2.61. However, our FY25 core FFO estimate rises by 5c from $27.77 to $2.82 as we made some changes to our G&A expenses and acquisition assumptions. In addition, we also slightly increased our DCF perpetual growth rate assumption (to 2.5%) and slightly lowered our targeted unlevered IRR to 7.7% as we now apply a 5.65% cap rate to CUBE’s portfolio. Given the valuation revisions, our PT increases from $43 to $45."

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