Jushi's Earnings Power Grows But This Analyst Remains Sidelined, Here's Why

Cannabis company Jushi Holdings Inc. JUSH JUSHF reported a 52.4% year-over-year increase in second-quarter revenue to $72.8 million, attributing it to acquisitions in Nevada, a bolstered California retail footprint and an uptick in sales across  Massachusetts, Illinois and Virginia.

However, despite the growth in sales, the company reduced its revenue guidance for the fourth quarter.

"Moving into the second half of the year, we are revising our fourth quarter 2022 annualized revenue to be between $320 to $350 million, with a low double-digit adjusted EBITDA margin," CEO and founder Jim Cacioppo said.

The Analyst

Cantor Fitzgerald's analyst Pablo Zuanic retained a neutral rating on the company's stock while cutting his price target from $2.55 to $2.25 on reduced estimates.

The Thesis

The analyst said in his recent note that the company is aware of increased competitive pressures in key states, highlighting the value of Jushi's operations in Virginia.

"We value the company's VA franchise and the outlook there for med and rec, as well as increasing vertically in key states," Zuanic noted. 

The company launched sales at its third Virginia dispensary subsequent to the quarter end and anticipates the opening of the fourth one "within a few days."

Jushi is also looking to reach a goal of 12,000 pounds of biomass produced by the end of calendar 2022 as part of its plan for the burgeoning medical market and recreational sales to start by 2024.

Zuanic said that Virginia assets are "unique and represent probably the most attractive value in Jushi." However, he prefers remaining sidelined while opting for "MSO companies with more breadth/depth, stronger balance sheets, and less execution risk."

Other States

In Nevada, the $53.6 million worth of acquisition of NuLeaf bolstered Jushi's retail footprint by adding two high-performing adult-use and medical retail dispensaries in Las Vegas and Lake Tahoe, in addition to a 27,000 sq. ft. cultivation facility in Sparks and a 13,000 square-foot processing facility in Reno, Nevada. NuLeaf also owns a third licensed retail dispensary located directly on Las Vegas Boulevard.

In California, Jushi intends to launch some of itsproducts to be exclusively sold at Beyond Hello dispensaries, which are expected to increase gross margins across its stores statewide.

The company's cultivation footprint in Pennsylvania is growing steadily as it seeks to more than double the total number of operating grow rooms and bolster canopy and annual biomass production to 36,000 sq ft and 22,000 pounds, respectively, by the year end.

During the quarter, the company was awarded a provisional medical marijuana dispensary license in the Cincinnati tri-state area of Ohio, establishing the company's fifth vertically integrated state-level operation.

JUSHF Price Action

Jushi's shares traded 7.87% higher at $1.92 per share at the market close on Wednesday. It opened at $2 a share on Thursday, but dipped to $1.80 by 11 a.m. EST.

Related News

• Where To Buy Legal Weed These Days: Jushi, Ascend And Verano Launch Cannabis Shops
• Jushi Opening Fourth Beyond Hello Cannabis Dispensary In Virginia
• Curaleaf Reports Second Quarter 2022 Results, Chairman Boris Jordan Says Fundamentals Are Strong

Benzinga Cannabis Capital Conference

Come and meet Pablo Zuanic and other extraordinary cannabis visionaries and let’s network and learn together. Join us in September at the Benzinga Cannabis Capital Conference and stay at the historic Palmer House Hotel. Don't miss out on a chance to hear about future market forecasts and worldly advice on investing and finance from those embedded in the cannabis industry. Ready, set, go! 

Book your tickets HERE, and your room HERE.

Photo: Courtesy of Kindel Media by Pexels and gerald by Pixabay