Cresco Labs: PI Financial Reiterates $23 Price Target Following Q1 Financials
Cresco Labs (CSE: CL) reported its first-quarter financial results last night. The company announced revenue of $178.4 million, a 9.9% increase quarter over quarter. Gross profit margin came in at 48.8% and the company experienced record revenue in both its wholesale and retail segments. The company did come out with some sort of soft guidance saying that they will have an annualized run rate of over $1 billion by the end of 2021 and gross profit margin will be above 50%.
So far no analyst has upgraded their 12-month price target on the company leaving the weighted average price target at C$23.36, or a 63% upside. The company has 16 analysts covering the stock with four of them having strong buy ratings, 11 have buy ratings and one analyst has a hold rating. The street high comes from Stifel-GMP with a C$34 price target, and the lowest target comes from Echelon Wealth with an C$18 price target.
In PI Financial’s note, their analyst Jason Zandberg reiterated his buy rating and C$23 price target saying that the first-quarter results show continued execution in both wholesale and retail segments. The results came in ahead of PI’s estimates and the consensus estimates of $170.8 million. Zandberg believes that the EBITDA margin will “further in H2/21 as current investments in expansion projects lead to significant increases in revenue.”
Zandberg calls Cresco Labs a “Continued Industry Leader in Wholesale,” with the companies wholesale segment being up 5.8% quarter over quarter to $95.6 million. The company maintained its #1 market share in Illinois and Pennsylvania. In California, the company grew its wholesale market share by 10% while the market only grew by 2%.
Zandberg believes that Massachusetts will be a top market for Cresco by the start of 2022 as the companies Fall River facility will be functional soon as well as the close of their Cultivate acquisition is expected to close by 4Q21.
With the completion of the Bluma Wellness acquisition, Zandberg believes that Cresco’s revenue and margins will see significant growth due to the Florida market. He writes, “CL aims to grow market share in Florida through investments in cultivation, introducing edibles into the market and doubling the store count.”
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