Trulieve Cannabis Corp. TCNNF TRUL is scheduled to report its financial results for the fourth quarter of 2021 and issue guidance for 2022 on Wednesday, March 30.
Cantor Fitzgerald’s analyst Pablo Zuanic expects that the Florida-based cannabis company will post a quarter-over-quarter drop in proforma sales for the period, with EBITDA margins being down as well, due to the “the macro backdrop and company-specific issues.”
“We believe this has been well communicated already,” he said, adding that he expects “minimal seq sales growth” in the first half of 2022.
The analyst projected that sales for the first quarter of 2022 will total $311 million, compared to $328 million by FactSet consensus.
Both FactSet consensus sales and Zuanic’s projections for the company’s fourth quarter dropped to $306 million and roughly $309 million, respectively.
The Analyst
Zuanic kept an Overweight rating on the company’s stock, lowering its 12-month price target to $60 from $72 on reduced estimates.
The Thesis
In the fourth quarter, Florida operations accounted for 65% of total quarterly sales, followed by Arizona (15%), Pennsylvania (13%), and other states the company operates in.
Zuanic said that Trulieve’s management has hinted that the company will be “more about integration” in 2022.
Same as for its industry peers, the cannabis federal reform expectations, industry consolidation, and Northeastern states going recreational remain the main catalyst for Trulieve as well.
However, the analyst thinks that “in isolation, Trulieve could lag peers this year with its footprint lacking soon to go rec markets (it is not in NJ/NY and it only has one store in CT), mixed signals from PA going rec, and question marks about the lack of a FL ballot by Nov 2024.”
Considering Cresco Labs Inc.’s CRLBF recent $2.1 billion acquisition of its rival Columbia Care CCHWF, Zuanic expects Trulieve to fuel growth with M&A resulting in adding to its footprint.
Even though the company seems to have “fewer catalysts this year” than other cannabis businesses among the MSO group, the “stock remains a top pick” for the analyst.
Price Action
Trulieve’s shares traded -0.87% at $20.45 per share at the market close on Monday.
Photo: Courtesy of Maxim Hopman on Unsplash
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