Cresco Labs: Canaccord, Eight Capital Raise Price Targets

Cresco Labs (CSE: CL) reported its second-quarter 2020 financials yesterday, posting revenue growth of 42% quarter over quarter to $94.3 million, thanks to a +30% sequential revenue growth in every single market except Massachusetts. The wholesale revenue and retail revenue grew 44% and 39% quarter over quarter, respectively. Cresco’s adjusted EBITDA was $16.5 million, a 419% jump on a quarterly basis.

Two analysts have changed their 12-month price target on Cresco Labs since the financial results were released.

• Eight Capital raises target price to C$13 from C$11
• Canaccord Genuity raises target price to C$12.25 from C$11.50

Fourteen analysts have a rating or price target on Cresco Labs. Three analysts have a strong buy rating, ten analysts have a buy rating, and only one analyst has a hold rating on the company. The mean price target is C$12.26 or a 37% upside. Vivien Azer from Cowen & Co has the highest price target of C$17.08, or a 90% upside, and has a strong buy rating. Echelon Wealth Partners analyst Andrew Semple has the lowest price target at C$9.50, or a 6% upside, and currently holds a strong buy rating.

In Canaccord’s note this morning, analyst Matt Bottomley raised their 12-month price target to C$12.25 from C$11.50 while reiterating their speculative buy rating. Bottomley headlines, “impressive Q2/20 provides  glimpse into free cash flow potential.” Cresco Labs blew Canaccords estimates out of the water, which seems to be the new normal south of the border. Canaccord’s estimates for revenue and adjusted EBITDA were $77 million and $4.8 million, while Cresco’s numbers came in at $94 million and $16.5 million, respectively.

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Bottomley states, “we believe the company will continue to generate top-line momentum during the back half of the year,” as more cultivation capacity comes online in Illinois and Pennsylvania and with their wholesale focused business model which reached over $55 million this quarter. Matt also adds, “Heading into Q3/20. We remain impressed with the company’s growth in both revenue and profitability.”

Canaccord also notes that Cresco had $74 million in cash, while becoming cash-flow positive in June, with the note stating, “we believe Cresco is well-positioned to extend its leadership within Illinois and Pennsylvania.”

With Canaccord increasing their price target, it also raised its full-year 2020 estimates. They now forecast revenue to be $392.6 million compared to their old $375 million estimate, and now expect net income to be $1.1 million compared to -$574,000.

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.