Evercore Is Avoiding These REITS This Earnings Season

Shares of PSA and CUBE have added roughly 10% in 2018

Jul 16, 2018 at 9:50 AM
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As earnings season continues to heat up, analysts have been adjusting their outlooks accordingly. This morning, Evercore ISI issued a note on self-storage specialists and real estate investment trusts (REIT) Public Storage (NYSE:PSA) and CubeSmart (NYSE:CUBE). Below, we'll take a closer look at the analyst note, and see how shares of PSA and CUBE are trading.

Evercore's note centered around the fact that self-storage stocks have gotten off to such a strong start in 2018, that they may struggle to live up to expectations this earnings season. Public Storage especially could disappoint investors, according to the analyst, while CubeSmart may also fail to deliver on its full-year outlook. As such, PSA stock was downgraded to "underperform" and CUBE was reduced to "in-line."

Speaking of their strong starts to the year, PSA shares were up more than 9% year-to-date coming into today, hitting an annual high of $234.90 back on July 6. But the pessimistic view of Evercore only mirrors the general opinion seen across Wall Street. In fact, the equity had only one "strong buy" rating, compared to 13 "holds" or "strong sells." Meanwhile, short interest is high, as the 8.2 million shares sold short equal more than eight times the average daily trading volume. At last check, the security was down 1.6% at $224.22.

Turning to CUBE, the shares sported an even more impressive 10% year-to-date rise and hit an all-time high of $33.18 last Monday. Like its sector peer, most analysts are skeptical of CubeSmart, with just two of nine handing out anything better than a tepid "hold." Also, short interest accounts for 4.9 days' worth of pent-up buying power, based on average daily volumes. The equity was last seen trading 1.4% lower at $31.38.

As for earnings, Public Storage will report on Wednesday, Aug. 1, and as one would expect given the technical strength, recent earnings reactions have been positive. Specifically, PSA shares have gained in the session following the last two earnings releases. CubeSmart, meanwhile, reports on Thursday, July 26, and the stock will try to prove Evercore wrong by replicating its 2.6% post-earnings rally from April.

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