WallStreet starts SmartStop Self Storage with bullish ratings on post IPO strength

Investing.com -- Analysts launched coverage on SmartStop Self Storage REIT with bullish ratings after its recent IPO driven by company’s improved balance sheet, growth prospects, and unique positioning in the U.S. and Canadian self-storage markets.

KeyBanc, Truist, JPMorgan (NYSE:JPM), BMO Capital Markets, and Stifel all initiated coverage with Buy or Overweight ratings, with price targets ranging from $36 to $40.

SmartStop raised $875 million through its IPO earlier this month, which helped materially reduce leverage by more than 50% to 4.7x on a net debt/EBITDA basis, according to KeyBanc.

The firm sees potential for outsized cash flow growth as the REIT improves its margins, executes acquisitions, and invests in technology.

Truist highlighted SmartStop’s compelling market exposure in the Greater Toronto Area, where supply per capita is much lower than in the U.S., supporting "relatively attractive" same-store revenue growth forecasts.

The broker also pointed to the company’s 12.4% projected FFO per share growth in 2025, above the sector average.

JP Morgan emphasized SmartStop’s discounted valuation on a cap rate basis and said its exposure to the Canadian market could drive near-term outperformance.

However, the firm flagged the risks associated with the company’s managed REIT platform, which contributes a significant portion of expected FFO growth.

BMO described SmartStop as positioned to grow via acquisitions after strengthening its balance sheet, forecasting above-peer FFO growth of 7.5% and 21.5% in 2025 and 2026, respectively.

Stifel also cited the company’s "attractive valuation" and forecast a 17.4x multiple on 2026 estimated FFO, saying shares trade at a 20.5% discount to its $42.00 NAV estimate.

SmartStop owns and manages approximately 220 properties with 17.7 million net rentable square feet across 24 U.S. states and Canada, making it the 10th largest self-storage operator in the U.S.