Barclays upgrades CubeSmart, cuts Public Storage on relative valuation

Investing.com --- Barclays upgraded CubeSmart to Overweight from Equal Weight and downgraded Public Storage to Equal Weight from Overweight, saying relative valuations now favor CubeSmart after its weaker year-to-date performance, while maintaining its Overweight rating on Extra Space Storage.

The rating changes reflect Barclays' view that the U.S. self-storage sector is entering the early stages of a recovery as new supply eases, supporting gradual improvements in occupancy, rental pricing and funds-from-operations growth. The brokerage expects all major operators to benefit, although it cautioned that elevated mortgage rates are likely to keep the recovery gradual by limiting housing turnover.

Barclays raised its price target on CubeSmart to $46 from $45, citing the company's urban-heavy portfolio, stronger pricing power and improving move-in trends. It also increased earnings estimates following better second-quarter operating metrics and said recent industry consolidation supports a valuation floor for the company.

The brokerage left its $349 price target on Public Storage unchanged, saying the stock's strong year-to-date outperformance has reduced upside potential despite continued expectations for healthy growth from acquisitions and operating initiatives.

Barclays also lifted its price target on Extra Space Storage to $172 from $170, citing stronger move-in rates, easing pricing headwinds and the company's third-party management platform and ancillary businesses as drivers of above-peer earnings growth.

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