BMO downgrades SmartStop Self Storage stock rating on Canada concerns

BMO Capital recently lowered its rating for SmartStop Self Storage (NYSE:SMA) stock, now classifying it as Market Perform, down from Outperform. The company set a new price target of $38.00 per share, which is lower than the current trading price of $33.96 and the previous high target of $40.00. BMO's assessment is based on the company's recent second-quarter 2026 results, which exceeded expectations despite certain challenges.

BMO Capital highlighted several factors influencing their decision, including Canada's impact on SmartStop's performance. Canada accounts for 9.4% of the company's net operating income. The self-storage sector has underperformed REITs over the past three months, with storage properties down 1.3% compared to a 3.2% gain for the broader REIT index.

The firm pointed out that demand remains steady but modest, with housing activity flat or slightly down. Move-in rate growth has been sluggish and below inflation, which has limited confidence in a more substantial recovery without a housing market rebound. On the positive side, supply conditions are improving, a key driver of sub-sector performance. SmartStop has seen geographic diversification, with the Sunbelt region showing improvement and poised to inflect in 2027.

Despite these near-term challenges, BMO noted that SmartStop posted a 16.5% revenue growth over the past year, with analysts forecasting 17% growth for fiscal 2026. The company offers a dividend yield of 4.8%. For those seeking more in-depth analysis, BMO encourages investors to consult SmartStop's comprehensive Pro Research Report, which is part of their 1,400+ InvestingPro offerings.