Cannabis stocks have been extremely volatile since Election Day, and that volatility continued for Green Thumb Industries Inc. on Thursday.
Cannabis stocks have been extremely volatile since Election Day, and that volatility continued for Green Thumb Industries Inc. on Thursday.
The Numbers: Green Thumb reported third-quarter earnings on Wednesday afternoon. The company confirmed Adjusted Operating EBITDA of $53.2 million, up 50.2% from a year ago. Third-quarter revenue was $157.1 million, up 31.3% from the second quarter and 131.1% year-over-year. Gross margins expanded from 53.2% in the second quarter to 55.4% in the third.
Cantor Weighs In: On Thursday, Cantor Fitzgerald analyst Pablo Zuanic reiterated his Overweight rating for Green Thumb and raised his price target from $29 to $35.
Green Thumb’s third-quarter numbers suggest “at least 20% upside” to analysts’ 2021 revenue estimates, he says.
Given Green Thumb has rallied 33% in the month leading up to earnings, Zuanic thinks investors should keep near-term expectations in check. However, the stock has “significant upside” in the medium-term.
“Our 12-month PT of $35 (up from $29) takes 20x EBITDA on our forward estimates (Dec’20 to Nov’21), and adds $3.50/share for optionality (conservatively, we estimate our 2024 sales estimates could be 33% higher if NY/PA/MD went rec; we take 50% probability,” Zuanic added.
Green Thumb already trades at the high end of the valuation range among US multi-state operators, but Zuanic says that valuation is justified given the company’s track record of profitability, growth potential and franchise strength.
Benzinga’s Take: Cannabis legalization in five states coupled with a Joe Biden victory on Election Day is good news for MSOs in the near-term. However, the ultimate price for cannabis stock investors is US federal legalization, which Zuanic said is likely still at least two to four years away.
