While 2020 was a momentous year for the cannabis industry in the United States, its growth trajectory remains strong this year also. The sales of both medical and recreational cannabis smashed records in the mature markets of Oregon and Colorado and hit new highs in emerging markets like Illinois and Ohio.
The industry’s growth has been bolstered by wider legalization of marijuana in more states and potential federal decriminalization of the plant and its derivatives. Although full-scale decriminalization is still some time off, Governors in various states have signaled that they will soon start reversing state bans on marijuana and push for federal decriminalization.
An increasing uptake of marijuana-based health treatments and dietary additives, along with strong consumer demand for recreational marijuana, have made Wall Street analysts bullish about leading cannabis stocks such as Curaleaf Holdings, Inc. (CURLF), Harvest Health & Recreation Inc. (HRVSF), and Green Thumb Industries Inc. (GTBIF).
Curaleaf Holdings, Inc. (CURLF)
Headquartered in Wakefield, Massachusetts, CURLF is an integrated medical and wellness cannabis operator in the United States. It operates through two segments—Cannabis Operations and Non-Cannabis Operations. The company provides hemp-based CBD products, vaporizing oils, cartridges, concentrates, capsules, mints, edibles, and flowerpots.
This month, CURLF agreed to acquire EMMAC Life Sciences Limited, the largest vertically integrated independent cannabis company in Europe. The acquisition will allow CURLF to expand its presence into the nascent European cannabis market.
Last month, the company announced plans to expand certain products into Utah. Its Select Elite product will be available to patients at medical cannabis pharmacies across the state. CURLF also plans to launch more diverse product offerings under the brand in the coming months to meet increasing medicinal needs.
CURLF’s total revenue has increased 205% year-over-year to $230.25 million in the fourth quarter, ended December 31, 2020. Its gross profit increased 399% from its year-ago value to $109.63 million. And the company’s adjusted EBITDA rose 289% year-over-year to $53.78 million. Its gross profit margin for the fourth quarter of 2020 was 48%, compared to 38% for the fourth quarter of 2019.
CURLF beat the Street’s EPS estimates in three of the trailing four quarters. A consensus revenue estimate of $1.27 billion for the current year represents a 100.4% increase from the same period last year. The stock has gained 288.7% over the past year.
All six Wall Street analysts that provided ratings for the stock have rated it “Buy.” Also, the consensus price target of $20.26 represents a potential upside of 23.8%.
Harvest Health & Recreation Inc. (HRVSF)
Founded in 2011, HRVSF is involved in the cultivation, processing, and selling of cannabis in the United States. It offers cannabis oil, capsules, tinctures, and cannabis product edibles under the Roll One, Modern Flower, Evolab brands, among others. The company also operates retail dispensaries that sell cannabis products to patients and customers.
Last month, HRVSF completed the divestiture of its two medical marijuana dispensary assets in North Dakota as a part of its strategic plan to allocate resources in core markets to further enhance growth opportunities.
In January, it launched recreational cannabis sales in Arizona. HRVSF registered its first sale as it began offering access to regulated and legal cannabis products to serve both medical patients and recreational customers across the state.
HRVSF’s total revenue increased 86% year-over-year to $61.64 million in the third quarter, ended September 30, 2020. Its gross profit grew 222.7% from the year-ago value to $38.33 million, while its adjusted EBITDA rose 156.1% sequentially to $10.5 million over this period. The company’s gross profit margin, excluding biological adjustments, in the third quarter was 46.6%, compared to 35.0% in the third quarter of 2019.
A consensus EPS estimate for fiscal 2021 represents a 158.3% improvement year-over-year. The consensus revenue estimate of $378.07 million for the current year represents a 65.3% increase from the same period last year. The stock has gained 97.6% over the past year.
Of the four Wall Street analysts that provided ratings for the stock, three have rated it “Buy.” Also, the consensus price target of $5.71 represents a potential upside of 47.1%.
Green Thumb Industries Inc. (GTBIF)
GTBIF is a manufacturer and seller of various cannabis products for medical and adult-use in the United States. The company distributes cannabis flower, processed and packaged products, and other cannabis products under the brand names – Rythm, Dogwalkers, The Feel Collection, and other brands to third-party retail stores, as well as directly to consumers in its own retail stores.
This month, the company collaborated with cannabis-infused beverage brand Cann to manufacture and distribute its line of cannabis-infused sparkling beverages. This partnership will complement GTBIF’s brand portfolio because more consumers are seeking alternatives to alcohol with familiar consumption experiences.
Last month, GTBIF raised approximately $56 million from the sale of 1.6 million registered subordinate voting shares. This should significantly increase the company’s capitalization and financial flexibility.
GTBIF’s total revenue climbed 131.1% year-over-year to $157.1 million in the third quarter ended September 30, 2020, driven by growth in its consumer-packaged goods and retail businesses. Its gross profit increased by 36.5% sequentially to $86.96 million. Its adjusted operating EBITDA rose 50.2% from the year-ago value to $53.18 million over this period.
A consensus EPS estimate of $0.42 for 2021 represents a 500% improvement year-over-year. The consensus revenue estimate of $833.71 million for the current year represents a 51.6% increase from the same period last year. The stock has gained 453.5% over the past year.
Wall Street analysts are extremely bullish on GTBIF. All nine analysts that provided ratings for the stock have rated it “Buy.” Also, the consensus price target of $40.20 indicates a potential upside of 27.8%.
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CURLF shares were trading at $15.49 per share on Wednesday afternoon, down $0.88 (-5.38%). Year-to-date, CURLF has gained 29.39%, versus a 4.28% rise in the benchmark S&P 500 index during the same period.
About the Author: Imon Ghosh
Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization. More...
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