Tanger (SKT) shares face limited upside despite solid fundamentals as the outlet-center real estate investment trust trades at a premium valuation relative to peers, BofA Securities said in a note Tuesday.

The stock has gained 15.1% over the past month, outperforming the RMZ index's 3.7% return, and its 21.9 times adjusted funds from operations multiple is above mall and shopping center peers despite similar growth expectations, according to the note.

Leasing activity, occupancy and tenant sales remain "solid," while higher capital expenditures for "re-tenanting" vacant spaces, including former Saks locations, along with a lower 80% tenant renewal rate due to portfolio refinement, are expected to weigh on near-term cash flow, the investment firm said.

Macroeconomic headwinds, particularly fuel price volatility driven by geopolitical tensions, also present a risk, BofA said, as it warned that higher gas prices could drag down discretionary tenant sales and diminish shopper traffic at outlet centers located far from urban cores.

BofA Securities downgraded Tanger to underperform from neutral, and maintained a $38 price target.

Price: 40.39, Change: -0.22, Percent Change: -0.54