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On Thursday, KeyBanc Capital Markets adjusted its stance on CubeSmart (NYSE:CUBE), elevating the self-storage company’s stock rating from ’Sector Weight’ to ’Overweight’. The firm has also established a new price target of $47.00 for the stock. Currently trading at $42.46 with a market capitalization of $9.7 billion, CubeSmart has maintained dividend payments for 21 consecutive years, as highlighted by InvestingPro. The upgrade comes as CubeSmart’s start to the year has shown promising signs that could suggest a performance surpassing management’s initial expectations for 2025.
CubeSmart’s same-store occupancy rate stood at 89.5% at the end of February, a slight year-over-year decrease of 50 basis points. This figure is relatively stable compared to the occupancy rate of 89.6% observed in the fourth quarter of 2024, which itself represented a year-over-year decline of 120 basis points. Additionally, the occupancy rate on December 31 was 89.3%, down 100 basis points from the previous year. Despite these slight dips, the company is experiencing an uptick in move-in rent growth, trending closer to a 7% year-over-year decrease, which is an improvement from the 10% decline seen in the fourth quarter of 2024. InvestingPro data shows the company maintains strong fundamentals with a healthy 72.7% gross profit margin and an impressive 4.9% dividend yield.
The KeyBanc analyst noted that while CubeSmart’s same-store pool was reset in 2025, which could slightly affect operating metrics, the company’s limited exposure to the Los Angeles market, where price restrictions are in effect until January 2026, positions it favorably. Moreover, the analyst pointed out that CubeSmart’s recent acquisitions made toward the end of 2024 and at the beginning of 2025 are likely to bolster the company’s performance.
KeyBanc’s positive outlook on CubeSmart is based on the company’s solid fundamentals and the expectation of continued support from recent strategic acquisitions. The analyst’s commentary reflects a belief that CubeSmart is on a trajectory that could lead to modest gains throughout the year, despite the potential impact of the same-store pool reset and the broader market environment. According to InvestingPro, analyst targets range from $44 to $53, with the overall Financial Health score rated as "GOOD." The new price target of $47.00 represents KeyBanc’s confidence in the company’s potential for growth in the near term. Subscribers can access the comprehensive Pro Research Report for deeper insights into CubeSmart’s valuation and growth prospects.
In other recent news, CubeSmart reported its fourth-quarter 2024 earnings, revealing results that fell short of Wall Street’s expectations. The company posted earnings per share (EPS) of $0.45, slightly below the anticipated $0.46. Revenue for the quarter was $231.41 million, missing the projected $265.29 million. In terms of analyst activity, there were no specific upgrades or downgrades mentioned. However, CubeSmart has set its 2025 FFO per share guidance between $2.50 and $2.59. The company remains focused on operational efficiencies amid rising real estate taxes, which increased by 17.5% during the quarter. CubeSmart’s management expressed cautious optimism for 2025, with a focus on strategic planning and resilience in the self-storage market. The company also announced a 2% increase in its quarterly dividend, bringing it to an annualized $2.08 per share.
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