Is It Time To Invest In Curaleaf? Analyst Shares Perspective Post Q1 Earnings

Curaleaf Holdings, Inc. CURLF reported its financial and operating results late Monday for the first quarter ended March 31, 2022, revealing revenue of $313 million, up 20% YoY.

Gross profit on cannabis sales was $154 million for the first quarter of 2022, compared to $128 million in the first quarter of 2021.

Net loss was $20 million, compared to a net loss of $15 million in the first quarter of 2021.

Adjusted EBITDA was $73 million for the first quarter of 2022, compared to $63 million for the first quarter of 2021.

Year-to-date the stock dropped 39.94%.

The Analyst

Cantor Fitzgerald’s Pablo Zuanic kept an ‘Overweight’ rating on Curaleaf stock, lowering its price target to $14.60 from $16.50.

The Thesis

Curaleaf is still among Cantor’s top picks in the multi-state operators' group, the analyst said, adding that lowering the price target was a response to reduced estimates.  

Curaleaf, the biggest US multi-state operator by revenue, is second to only a few Canadian LPs in the international markets, according to Zuanic. The cannabis company is well-positioned to take advantage of eastern states going recreational, where prices are expected to be above average in the beginning.

“It should also see margin expansion as it gains scale, adds more vertical integration, and rolls out margin-enhancing innovation.”

Zuanic said he doesn’t think Curaleaf will be taken private, “selling out at the bottom (like others), or operating with a stretched B/S (like others), even though plans for a new CPG arm raise questions about reinvestment risk. Even without regulatory changes investors have an opportunity to buy the market leader at around two times our 2024 sales estimate.”

The Price Action

Curaleaf shares traded 7.67% lower at $5.18 per share at the time of writing Monday.

Photo: Courtesy of CRYSTALWEED cannabis on Unsplash