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Investing.com - JPMorgan downgraded SmartStop Self Storage (NYSE:SMA), a $1.4 billion market cap self-storage REIT with a 4.46% dividend yield, from Overweight to Neutral on Friday, while also lowering its price target to $39.00 from $41.00. According to InvestingPro data, analyst targets for the stock currently range between $38 and $42.
The downgrade comes after SmartStop’s significant outperformance against both JPMorgan’s self-storage and overall REIT universes following the company’s IPO, with the bank describing the move as simply a "stock move" where "the low hanging fruit has been ’picked.’" While InvestingPro analysis shows the company isn’t currently profitable, analysts expect both sales and net income growth this year.
JPMorgan also cited its neutral stance on self-storage sector fundamentals compared to other property types, noting the industry is experiencing lower than normal demand due to muted housing movement, which "may take some time to unwind."
The bank observed that while SmartStop’s same-store NOI outlook continues to be slightly above the sector average, this gap has been narrowing recently.
On a positive note, JPMorgan acknowledged SmartStop remains active in acquisitions, which should drive "attractive headline growth given its unique platform, and help improve its core operating margins."
In other recent news, SmartStop Self Storage REIT, Inc. has completed its acquisition of Argus Professional Storage Management, merging their extensive portfolios to manage over 460 self-storage properties across North America. This transaction combines SmartStop’s 236 operating properties with Argus’s 227 managed stores, resulting in a significant expansion of their operations. In addition to this merger, SmartStop successfully closed a CAD $200 million Series B Senior Unsecured Notes offering, which is set to mature in 2030 with an interest rate of approximately 3.888% per annum. Morningstar DBRS has rated these notes BBB mid with a Stable Outlook.
Furthermore, Truist Securities has reaffirmed its Buy rating for SmartStop Self Storage, maintaining a price target of $39.00. The research firm highlighted that SmartStop’s management has noticed stabilization in self-storage core operations, with improved demand compared to the previous year. The company has also provided quarter-to-date operating updates and continues to uphold its full-year operating guidance. These developments reflect SmartStop’s strategic growth initiatives and financial maneuvers in the self-storage sector.
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