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Investing.com - Deutsche Bank upgraded CubeSmart (NYSE:CUBE) from Hold to Buy on Monday, citing the company’s exposure to markets with favorable demand and supply fundamentals. According to InvestingPro data, CubeSmart currently maintains a "GOOD" overall financial health score, with particularly strong profitability metrics.
The upgrade comes as Deutsche Bank notes that the self-storage sector is showing signs of stabilization after experiencing weak fundamentals. While street rates are beginning to stabilize after more than a year of negative growth, the bank acknowledges that concessions remain elevated and net effective rents are still down year-over-year. With a market capitalization of $51.8 billion and a steady dividend yield of 4.08%, CubeSmart presents interesting metrics for value investors. Discover more detailed financial insights and exclusive analysis with InvestingPro, which offers comprehensive research reports for over 1,400 US stocks.
Deutsche Bank highlighted CubeSmart’s high exposure to markets with better demand and supply dynamics, particularly in New York City, which should drive stronger rent growth. The bank also pointed to the company’s solid execution in managing operating expenses as a positive factor. Recent financial data shows the company maintaining a healthy gross profit margin of 72.7% and revenue growth of 2.13% over the last twelve months.
The self-storage sector’s valuation has compressed to approximately 17.0x price-to-funds from operations (P/FFO) compared to a five-year average of about 19.6x, suggesting current earnings expectations are reflected in valuations, according to Deutsche Bank.
The bank maintains a cautiously optimistic outlook for the self-storage sector in the second half of 2025 and into 2026, expecting a gradual recovery despite continued challenges from supply in markets such as Orlando, Charlotte, Los Angeles, and several other cities.
In other recent news, Public Storage has completed a €425 million senior notes offering through its subsidiary, Public Storage Operating Company. These 3.500% senior notes, due in 2034, are guaranteed by Public Storage and are considered direct, unsecured, and unsubordinated obligations of the company. The notes will have annual interest payments starting in January 2026. In its second-quarter 2025 earnings report, Public Storage revealed earnings per share of $1.76, which was below the expected $2.55, marking a 30.98% negative surprise. Revenue, however, aligned with expectations, reaching $1.2 billion. The earnings miss was noted by investors, as evidenced by a subsequent decline in stock price. These developments are part of the company’s recent activities, with the earnings report being particularly significant for stakeholders.
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