This Cannabis MSO Is Well-Placed To Benefit From NJ Rec Market Launch, Analyst Thoughts Ahead Q1 Earnings

Green Thumb Industries GTII GTBIF is scheduled to report its first-quarter earnings report on Wednesday.

Cantor Fitzgerald’s analyst Pablo Zuanic shared some insights on what to expect from the report. He anticipates the focus will be on the launch of recreational cannabis sales in New Jersey given that GTI is one of the seven treatment centers (cannabis dispensaries) allowed to sell marijuana in 13 incumbent medical stores (12 are active).

The analyst said that the company is “well-placed” within the market, which saw over 12,000 customers spend nearly $2 million for cannabis on April 21 – the first day of recreational sales in the Garden State.

The Analyst

Zuanic retained an “overweight” rating on the Green Thumb’s stock while reducing the price target down to $39 from $41 on reduced estimates.

The Thesis

The company’s management guided for mid-single-digit quarter-over-quarter growth in sales, the same as a number of companies that previously pointed to the market decline in January.

However, the analyst estimates that “the company’s markets “only” fell 2.5%” quarter-over-quarter during the first quarter of fiscal 2022.

Moreover, GTI is poised to benefit from the acquisition of LeafLine Industries - only two licensed cultivators in the Minnesota medical cannabis market - which was closed in December.

The deal included a cultivation facility and five open and operating retail locations in Eagan, Hibbing, St. Cloud, St. Paul and Willmar.

Operations in Virginia, Roud Island and Maryland are also expected to affect the quarterly performance and offset the overall market decline. Zuanic estimates “sales of $240Mn (vs. $244M reported in 4Q21) vs. FactSet consensus of $239Mn.”

Interestingly, the analyst added that among the MSO group, Green Thumb was the best performer in calendar year 2021 in terms of EBITDA to operating cash flow conversion.

“We project EBITDA margins mostly stable seq north of 31%,” Zuanic said.

Related News

• Green Thumb Industries Announces Second Round Of Good Green Grant Recipients
• Green Thumb To Open RISE Mankato, Its 77th Cannabis Dispensary; Where Will First Day Sales Profits Go?
• Wes Moore Resigns From Green Thumb Industries Board Of Directors
• Green Thumb Industries Reports 8th Consecutive Quarter Of Positive Cash Flow, Q4 Revenue Up 37% YoY

Price Action

GTI’s shares traded 2.42% lower at $13.71 per share at the time of writing on Tuesday morning.

Photo: Courtesy of Maxim Hopman on Unsplash