Curaleaf Holdings CURLF posted its first-quarter 2021 financial results on Monday with total revenue of $260.32 million, up by 170% from the same period of 2020. The cannabis company reported a positive adjusted EBITDA of $62.63 million, which compares to $20 million in the same quarter of the prior year.
After the quarter ended, Curaleaf closed its acquisition of EMMAC, a vertically integrated cannabis company in Europe, which is said to be the biggest on the continent. What’s more, the company obtained $80 million from a strategic investor for its European business subsidiary.
The Analyst
Cantor Fitzgerald’s Pablo Zuanic restated their ‘Overweight’ rating on Curaleaf’s stock and kept their 12-month price target of $26.50.
The Thesis
Curaleaf disclosed somewhat higher sequential sales growth than Cantor had projected and has also provided guidance for further sequential sales growth in the range of 17-21%, based on serious cultivation expansion in crucial markets and new store openings, explained Zuanic in a Tuesday note.
“In our view, full-year targets would be well within reach if the company can deliver the anticipated 2Q ramp-up,” Zuanic wrote.
The company also kept its fiscal year 2021 sales guidance of $1.2 to $1.3 billion, while management projected higher margins.
“After the EMMAC deal, we believe the share price should reflect international optionality,” wrote Zuanic who projected the EMMAC deal to close during the third quarter and model $35 million in sales for the back half of the year.
“Most of the larger Canadian LPs trade in a range of 8-12x CY22E EV/Sales and few are profitable. Our $26.50 price target is based on 8x our CY22 sales estimate.”
The Massachusetts-headquartered company has expressed confidence that U.S. Senator Chuck Schumer will introduce a cannabis reform bill this May, which Zuanic has said could be a positive catalyst for public multi-state cannabis operators.
The Price Action
Curaleaf’s shares were trading 1.60% lower at $14.13 at the time of writing.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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