Is It Time To Invest In Curaleaf? Analyst Says 'Use The Pullback' As The Stock Has Upside Potential

Curaleaf Holdings, Inc. CURLF reported its financial and operating results Thursday for the fourth quarter and year ended December 31, 2021. 

Highlights include record fiscal year 2021 revenue and Adjusted EBITDA¹ of $1.2 billion and $298 million, representing an increase of 93% and 107%, respectively; fourth-quarter 2021 Revenue and Adjusted EBITDA of $320 million and $80 million, representing an increase of 39% and 48% year-over-year, respectively.

The Analyst

Cantor Fitzgerald’s Pablo Zuanic kept an ‘Overweight’ rating and lowered its price target on the stock to $15.50 from $16.50.

The Thesis

In spite of lowering the price target on reduced estimates, the analyst emphasized that Curaleaf stock is still among Cantor Fitzgerald’s top picks in the multi-state operators' group.

The cannabis giant missed sales projections slightly – by 1.5%, and offered sales guidance for 2022 in the range of 5-11% below FactSet consensus and Cantor’s estimates.

Curaleaf stock dropped 17% over the last month, compared to AdvisorShares Trust AdvisorShares Pure US Cannabis ETF MSOS that lost 6%. According to Zuanic, this is due to the “unwarranted concerns not affecting fundamentals,” and it makes the stock trading in line with Green Thumb Industries GTBIF at “9x our CY23 estimates (vs. 6.3x for the group average).”

The company is well-positioned to benefit from the “green wave” in the eastern states, with New Jersey planning to start adult-use sales in the second quarter of the year. Even though not at Green Thumb's level, partly because it's more developed, Curaleaf is also working on its expansion, launching brands across states and innovating its portfolio such as fast onset edibles line for example, the analyst noted.

“We would make use of the pullback; and even though we continue to think the regulatory outlook remains the main driver of sentiment, EBITDA growth of 32-41% (based on the guidance range) would warrant share price upside.”

The Price Action

Curaleaf shares closed Thursday market session 0.99% higher at $6.11 per share.

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