The increasing requirement of cannabidiol oil for therapeutic needs from the aging population and changes in consumer preferences towards innovative recreational cannabis products have been driving the cannabis industry’s growth. Moreover, the government is expected to soon legalize cannabis at a federal level, backed by several Democrats and Republicans. The U.S. cannabis industry is growing at an unprecedented pace, and cannabis sales are estimated to increase 41% year-over-year to finish 2021 at $31 billion.

As of November 2021, 180 bipartisan Members of Congress, 39 bipartisan Senators, and Governors from 21 states and territories supported the SAFE Banking Act.  Furthermore, as of January 2021, 321,000 full-time American jobs supported by legal cannabis have also created a positive outlook surrounding the cannabis market.

Given this backdrop, Wall Street analysts expect cannabis stocks Curaleaf Holdings, Inc. (CURLF) and Zynerba Pharmaceuticals, Inc. (ZYNE) to gain substantial momentum in the near term.

Curaleaf Holdings, Inc. (CURLF)

CURLF is a vertically integrated cannabis operator in the United States that researches and develops capabilities to distribute cannabis products. The company operates in two segments- Cannabis Operations; and Non-Cannabis Operations. Through its Curaleaf Hemp brand, the company provides service across the medical and adult-use markets and the cannabidiol (CBD) category.

This month, CURLF has planned to open four new dispensaries in Florida by the end of this year. This expansion should increase the CURLF’s retail footprint to 42 dispensaries statewide and 117 across the country. The company has also planned to launch new products in the Florida market next year.

CURLF’s total revenue for the third quarter ended September 30, 2021, increased 73.9% year-over-year to $317.13 million. The company’s gross profit grew 57.8% from the year-ago value to $182.73 million. Its income from operations rose 144.3% from the prior-year quarter to $39.99 million. Also, the company’s adjusted EBITDA increased 68.7% year-over-year to $71.36 million.

CURLF’s revenue is expected to increase 34.3% year-over-year to $1.64 billion in fiscal 2022. Its EPS is expected to grow 20% per annum in the next five years.

Closing the last trading session at $8.6, the average analyst price target of $18.59 represents a 116.2% potential upside.

Zynerba Pharmaceuticals, Inc. (ZYNE)

Incorporated in 2007, ZYNE develops next-generation transdermally-delivered cannabinoid therapeutics for patients affected by rare and near-rare neuropsychiatric conditions. The company’s lead product candidate, Zygel (ZYN002 CBD Gel), is a cannabidiol (CBD) gel for FXS, ASD in pediatric patients, 22q, and a heterogeneous group of rare epilepsies known as DEE.

In November, ZYNE announced that the European Patent Office issued the patent titled “Treatment of Fragile X Syndrome and Autism with Cannabidiol.” This patent includes claims directed to methods of treating one or more behavioral symptoms of Fragile X syndrome. Also, this new patent is a part of an expanding international intellectual property portfolio covering ZYNE’s transdermal cannabidiol product candidate, Zygel CBD gel.

During the third quarter ended September 30, 2021, ZYNE’s interest income came in at $5.04 thousand. The company’s loss per share decreased 16.1% year-over-year to $0.26. Its cash and cash equivalents grew 27.9% to $75.64 million for the nine months ended September 30, 2021.

ZYNE’s EPS is estimated to grow 48.4% in the current year.

The consensus price target of $9 represents a 180.4% potential gain from the last closing price of $3.21.

CURLF shares were trading at $8.98 per share on Thursday afternoon, up $0.38 (+4.38%). Year-to-date, CURLF has declined -24.99%, versus a 27.70% rise in the benchmark S&P 500 index during the same period.

About the Author: Priyanka Mandal

Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...

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