Analyst Explains Why Jushi Is One Of The Best Cannabis Stocks Among Leading MSOs

Jushi Holdings Inc. (OTCQX: JUSHF) recently announced it has signed an agreement to buy 100% equity interest of an entity operating a recreational and medical dispensary under the name The Apothecarium in Las Vegas, Nevada. The purchase price was not disclosed.

This acquisition together with the April 2021 purchase of Franklin Bioscience NV, LLC, enables Jushi to become vertically integrated in Nevada.

Year to date, the company’s stock lost 30.30%.

The Analyst 

Viridian Capital Advisors’ Jonathan DeCourcey initiated coverage of Jushi Holdings with a Buy rating and $5.25 price target.

The Thesis 

Jushi built itself into a leading multi-state operator via the purchases and growth of assets in California, Nevada, Ohio, Illinois, Massachusetts, Pennsylvania, and Virginia, with the last four ones being the most important markets for the company. The analyst projects for Pennsylvania to legalize adult-use cannabis the following year and start the sales in 2023.

DeCourcey highlighted that Jushi is funding its expansion activities with its cash and projected generation.

Viridian Capital Advisors recommended Jushi to investors as one of the best picks among the key multi-state operators, basing its call on the company’s “outperforming growth opportunity in ’22 and beyond, Jushi’s proven track record as a successful acquirer of assets and the company’s thoughtful approach to expansion to date.”

The stock is being underappreciated by investors not realizing the company’s growth opportunity, the analyst explained. “Jushi is a roll-up story with a proven track record of successful acquisitions,” De Courcey pointed out.

“Our $5.25 price target values Jushi in line with a peer group of top MSOs on ’22 EV/EBITDA while noting that longer term a premium valuation is feasible on execution of expansion.”

According to the analyst, only Ayr Wellness (OTCQX: AYRWF), Terrascend (OTCQX: TRSSF), and Ascend Wellness (OTCQX: AAWH) are projected to have higher revenue year-over-year growth next year among big multi-state operators.  

“Our forecasts for 2021 and 2022 are in line with guidance with estimates calling for margin expansion on enhanced vertical integration and scale,” the analyst concluded.

Benzinga Cannabis Capital Conference

• Scott Greiper of Viridian Capital Advisors will be attending Benzinga's Cannabis Capital Conference in New York City this week, Oct. 14-15 at the Marriot Marquis. Tickets are still available.

The Price Action 

Jushi’s shares closed Friday market session 3.35% lower at $3.91 per share. 

Photo: Courtesy of Esteban Lopez on Unsplash