Trulieve Cannabis (CSE: TRUL) this morning saw Canaccord Genuity reaffirm its speculative buy rating on the company this morning, leaving its price target of $35 unchanged. The lack of change in price target comes days before Trulieve is set to unlock 11,205,960 subordinate voting shares from its founding shareholders, the equivalent of 15% of the shares initially locked up.
The speculative buy rating placed on the firm by Canaccord appears to largely be based on Trulieve’s continued dominance within the Florida cannabis market, with the firm believed to have maintained 50% market share for both concentrate and flower sales based on Florida’s Office of Medical Marijuana Use (OMMU) data. The analyst also pointed to the increasing dominance the firm has seen in flower sales, with Trulieve believed to represent approximately 57% of sales in the category across the state.
The target and buy rating has also notably remained unchanged in the face of the ongoing COVID-19 pandemic, with the analyst, Derek Dley, pointing to several initiatives conducted by the firm to address the situation as a positive. Such initiatives include the delivery fleet expansion to over 70 vehicles to provide at-home delivery of Trulieve’s products from their state-leading 47 dispensaries, as well as the firms strong cash cash of US$92 million at the end of 2019.
The price target set by Canaccord is based on the firms 2021 EBITDA estimate of US$226 million for the cannabis producer, with a multiple of 13.1x utilized to generate the C$35 price target. The analyst also went as far as to say that Trulieve is undervalued as a result of trading at only 6.2x Canaccord’s 2021 EBITDA estimate.
While the price target and rating by Canaccord is unchanged, and has been reiterated by the firm ahead of Trulieve’s May 20 scheduled release of first quarter 2020 financials, others are dismayed that it doesn’t reflect other factors currently at play. In particular, the price target reiteration is notably two days before the second last share unlock of Trulieve founders shares.
Popular cannabis stock Twitter commentator @BettingBruiser was quick to highlight the disconnect this morning, simply stating that the speculative rating comes just before the share unlock. 11,205,960, or 15%, of subordinate shares held by company founders are set to unlock on May 15, an extension put in place by the company back in mid-December following the release of the now-famed short report against the company. The remaining 54,047,133 shares subject to the lock-up agreement will become free trading on July 25, 2020.
Trulieve Cannabis last traded at $15.79 on the CSE.
Information for this briefing was found via Sedar, Canaccord Genuity and Trulieve Cannabis Corp. 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.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.