Canaccord Maintains $1.00 Price Target On Tilt Holdings
TILT Holdings (CSE: TILT) reported its second quarter revenues recently, posting revenue that was down 9% quarter over quarter to $38.6 million. The decrease quarter over quarter was driven by a decrease in sales from the company’s subsidiary Jupiter Research and lower wholesale demand that was blamed on COVID-19. Gross margins came in at 28.3%, and the company posted their second consecutive positive adjusted EBITDA of $1.2 million along with positive free cash flow.
In Canaccord’s note to investors, analyst Bobby Burleson reiterated his C$1 price target and speculative buy rating on the stock, while headling the note as “solid quarter ahead of improving demand trends.” Both revenue and adjusted EBITDA came relatively in line with Canaccord’s estimates of $38 million and ($0.5) million. He explained that their Nevada subsidiary Blackbird helped gross margins grow this quarter due to the ramping up of home delivery as dispensaries were temporarily closed due to COVID.
The 9% consecutive decline in revenue was said to be mainly due to the reduced demand in Massachusetts, where the state temporarily shut down recreational sales. Still, management has highlighted that June sales in Massachusetts showed strong demand with monthly sales higher than the last two months combined and shows hope that their Massachusetts arm of the business gets back to normalcy quicker.
Bobby Burleson says that he believes TILT will continue to report being free cash flow positive even with COVID headwinds and “capable of funding ongoing growth initiatives with its current cash position.”
Although Bobby did not change Canaccord’s 12-month price target or recommendation on TILT Holdings, he did change their full year revenue guidance. He now expects third quarter and 2020 full year revenue to come in at $40 million and $164 million, respectively, while 2021 estimates remain the same at $294 million.
Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
