Should You Buy Columbia Care Shares Right Now? This Analyst Explains

Columbia Care Inc. CCHW CCHW CCHWF recently reported its financial and operating results for the second quarter ended June 30, 2021, revealing a 232% year-over-year and 19% sequential revenue pop to $109.7 million. 

The Analyst

Cantor Fitzgerald’s Pablo Zuanic upgraded the ‘Neutral’ rating on the stock to ‘Overweight’ and raised the price target from $5.30 to $5.50. 

The Thesis

While considering the sectoral derating, the analyst upgraded the rating on Columbia Care based on increased estimates. 

“As we have written in other notes, we think the current sector malaise is overdone, especially in what relates to the US group (AdvisorShares Trust AdvisorShares Pure US Cannabis ETF MSOS is down 20% over the last 3- month period versus +7% for SPDR S&P 500 (ARCA: SPY) ). But this also provides an attractive entry point into some of these stocks, in our view,” Zuanic pointed out. 

With Columbia Care being down 30% over the same period despite its reaffirmed guidance for the full year, there is a potential upside from several eastern states where it has vertically integrated operations – New Jersey, New York, Virginia, Pennsylvania, Maryland, the analyst explained. 

In the case of New Jersey, the potential upside can come as quickly as February. 

“We think the FactSet consensus CY22 sales estimate does not properly reflect the New Jersey ramp, various cultivation expansion plans, or the Medicine Man deal in Colorado (we are 14% above consensus in sales, but in-line on EBITDA, assuming margins 4pt below consensus).” 

With the targeted share price of $5.50, the analyst projected a potential upside of around 40%. 

“We also think the company EV of $1.92Bn makes it more reachable for those looking for partnerships or contingent buyouts. Like Trulieve (OTCQX: TCNNF) Columbia Care trades 5-6pts below the MSO group stand outs Curealeaf (OTCQX: CURLF) and Green Thumb Industries (OTCQX: GTBIF)," Zuanic concluded. 

Price Action 

Columbia Care’s shares were trading 1.72% higher at $4.08 per share at the time of writing Friday morning. 

Photo: Courtesy of herbadea Berlin on Unsplash