Cantor Fitzgerald Drops Price of Trulieve Cannabis Corp Ahead of Q2 2021 Report, Still Among America’s Top Picks

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Thusday, Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF) introduced a full brand portfolio, including four distinct brands – the Muse, Sweet Talk and Momenta brands and the extension of the Cultivar Collection – to serving the consumer in the adult and medical use markets.

The news has arrived before the release of its second quarter results report after the close on Thursday, August 12, and in anticipation of $ 2.1 billion deal closes to merge with Harvest Health & Recreation Inc. (CSE: HARV) (OTCQX: HRVSF).

The combined company should generate $ 1.2 billion in revenue in 2021, having operations in 11 states, including total culture and 3.1 million square feet processing capacity distributed 22 installations, as good as 126 points of sale sell both medical and recreational cannabis.

As the multi-state operator faced competition in Florida in 2021, companies like Surterra Wellbeing, Curaleaf Holdings Inc. (CSE: CURA) (OTCQX: CURLF), AltMed Florida and Liberty Health Sciences Inc. (CSE: LHS) (OTC: LHSIF), sound the stock is down 3.44% year-to-date after having experienced a significant growth trajectory in recent years.

The analyst

Cantor Fitzgerald’s Pablo Zuanic remained overweight on Trulieve stock, lowering the price target to $ 56 from $ 71.

“We would be don’t make much of our price reduction targetbecause we just moved to a more consistent approach between companies, using short-term 12-month price targets and not taking into account DCF or the long-term payback option, ”he explained. ‘analyst.

Trulieve / Harvest Fusion

Zuanic said that the the merger with Harvest will position Trulieve as a leader in Florida, Arizona and Pennsylvania, in addition to having a “relevant presence” in several other states such as Georgia where she recently obtained a license.

By the end of the year, the newly created company should operate 21 stores in Pennsylvania, 98 stores in Florida – accounting for 28% of the state’s total stores – and potentially ending up with 25% of state stores in Arizona.

The company should be one of the largest holdings in any cannabis stock portfolioZuanic said, reaffirming his recently disclosed opinion on the best photos among US cannabis stocks.

” We project revenue north of $ 2.7 billion by 2025, even assuming that PA / FL remain only medical markets, ”he added.

The multi-state operator recently announced that the 30-day waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 in connection with the previously announced proposed acquisition of Harvest has expired and that it was one more step towards the conclusion of the merger.

“The main steps are now with state level regulators,” Zuanic said. “We model the transaction as closed on 1/1/22.

Zuanic believes that the revenue mix at the end of the merger will be “70/30 Trulieve / Harvest,“with some dilution of margins.

“We continue to believe that a piecemeal approach (acquiring a collection of assets over time) could have been more profitable for Trulieve (although not efficient over time), as it sought to enter new States or to add depth to existing states, ”Zuanic noted. .

Before the second quarter earnings report

FactSet assuming a sequential 8% increase for the second quarter, to $ 209 million in sales, the analyst said he believed “there could be a significant advantage to these numbers, if at least the price / mix was maintained in Florida “.

Zuanic second quarter sales plans to reach $ 223 million up 15% sequentially, compared to the FactSet consensus of 8% – including $ 196 million from Florida, $ 20 million from Pennsylvania and the remaining $ 7 million from Connecticut, Massachusetts and California.

Adjusted EBITDA will amount to $ 101.8 million in the second trimester, according to Zuanic, representing 45.7% of sales.

“We are waiting Trulieve to keep adding assets (both in depth and breadth) in organic terms (via license gains, say, NJ / VA?) and M&A, ”Zuanic concluded.

Price action

Trulieve’s actions were 4.76% higher trading at $ 33 per share Friday morning.

Photo: Courtesy of Nicholas Cappello on Unsplash


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