Wednesday, Canaccord came out with their updated valuations for the large three multi-state operators. In doing so, they raised their 12-month price target on Curaleaf Holdings (CSE: CURA) to C$23.50 from C$18.50, while reiterating their Speculative Buy rating on the company.
Curaleaf currently has nine analysts covering the company with a weighted 12-month price target of C$20.19. This is up from the average at the start of the month, which was C$19.44. Two analysts have strong buys, while the remaining nine have buy ratings on the company.
Derek Dley, Canaccord’s U.S. cannabis analyst, said the primary reason for the price target increase is due to “strong fundamental performance to date and attractive growth profile, the shifting of our P.V. factor by a year,” as well as what Dley calls a number of de-risking events such as the Biden presidency, the MORE Act passed through the House, and Democrat control of the Senate. Dley reiterates that Curaleaf is their top pick in the sector by both size and growth profile.
Alongside the recent C$316.8 million raise, plus the U$50 million credit facility, which has broken the lower bound on interest rates at 10.25%, Dley now forecasts that Curaleaf to have over U$400 million in cash on hand. He comments, “We believe this puts the company in a favourable capital position vs. many of its U.S. peers with the flexibility to better navigate what is an extremely fast-moving industry at the state level that could see as many as five of CURA’s markets legalize/ implement adult-use sales in the next 12 months (AZ, NJ, NY, PA, CT).”
Dley calls Curaleaf’s third quarter a banner quarter. The company reported pro-forma revenues of U$215 million, which is up 30% quarter over quarter. Curaleaf’s gross margin also grew roughly 700bps to 50%, mainly driven by operational efficiencies.
Dley says that Curaleaf’s fourth-quarter guidance of U$250 million in pro-forma revenue to be on the low end. He writes, “This would represent QoQ top-line growth of ~16%, which we believe leaves room for incremental upside given current industry trends.”
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.
