KeyBanc Cuts CubeSmart (CUBE) and Extra Space Storage (EXR) to Hold on Valuation

KeyBanc downgraded CubeSmart (NYSE: CUBE) and Extra Space Storage, Inc. (NYSE: EXR) from Buy to Hold.

Analyst Todd M. Thomas said, "We are downgrading our ratings on both Extra Space Storage Inc. (EXR-NYSE) and CubeSmart (CUBE-NYSE) to HOLD from BUY on valuation, as EXR has exceeded our former $50 price target and CUBE has closed in on our former $19 price target."

"To be clear, our downgrades are not predicated on eroding fundamentals. Instead, our calls are largely based on valuation, as we think the momentum carrying these stocks over the last several months has boosted share prices too far too fast; it is now too difficult to recommend that investors allocate new capital to these stocks at current valuations. At a minimum, we assume that new capital would require a minimum 10% total return; valuations at warranted target prices required to satisfy such returns would imply a 4.9% implied cap rate for CUBE and a 4.6% implied cap rate for EXR," he added.

For an analyst ratings summary and ratings history on CubeSmart click here. For more ratings news on CubeSmart click here.

Shares of CubeSmart closed at $18.55 yesterday.

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