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Raymond (NSE:RYMD) James upgraded SmartStop Self Storage (NYSE: SMA) from Outperform to Strong Buy on Wednesday, raising its price target to $44.00 from $42.00. Currently trading at $35.48 with a market capitalization of $1.37 billion, SmartStop appears overvalued according to InvestingPro analysis. The upgrade reflects the firm’s positive view of SmartStop’s high-quality portfolio and operating platform, which it considers comparable to industry peers Public Storage (NYSE:PSA), Extra Space Storage (NYSE:EXR), and CubeSmart (NYSE:CUBE).
The firm highlighted SmartStop’s advantages including higher organic growth potential, margin upside, and greater external growth impact due to its smaller size. With revenue growth of 5.34% in the last twelve months and analysts projecting 9% growth for fiscal year 2025, same-store revenue growth is expected to accelerate more than 200 basis points compared to last year, leading legacy peers in the self-storage sector. InvestingPro data reveals 6 additional key insights about SmartStop’s growth trajectory.
SmartStop’s Toronto portfolio, representing 10% of same-store revenue, saw 7.0% year-over-year revenue growth in the first quarter of 2025 and a 70 basis point sequential increase on a constant currency basis. Raymond James noted this market’s similarity to New York City’s self-storage market, characterized by stability and less reliance on housing mobility.
The firm expects SmartStop’s NOI and EBITDA margins to expand as the company scales through external growth, allowing expenses to spread across a growing portfolio. With an overall Financial Health Score of FAIR from InvestingPro, future growth in the managed REIT platform and third-party management could further contribute to margin expansion. Subscribers can access the comprehensive Pro Research Report for deeper insights into SmartStop’s financial health metrics.
Raymond James acknowledged that while revenue growth has historically been the largest driver of self-storage stocks, this relationship has recently been overshadowed by interest rates, mortgage rates, and their impact on housing mobility, which is a significant driver of self-storage demand.
In other recent news, SmartStop Self Storage REIT Inc. reported its Q1 2025 earnings, revealing a 3.2% growth in same-store revenue and a 2.3% increase in same-store net operating income. Despite a negative earnings per share of -$0.35, the company’s revenue reached $65.45 million. SmartStop’s financial outlook includes full-year funds from operations (FFO) guidance between $1.84 and $1.92 per share. The company has been active in acquisitions, completing or contracting $186 million in deals since its NYSE debut in April 2025. In addition, SmartStop has joined the Russell 3000 Index, enhancing its visibility among institutional investors. Analysts at KeyBanc have raised their price target for SmartStop to $40, citing favorable debt deals and an expected reduction in the company’s cost of capital. This comes after SmartStop’s CAD $500 million private placement, which exceeded previous expectations. The company’s strategic focus on technology and market expansion is reflected in its ongoing growth initiatives.
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