Trulieve Cannabis Corporation is a buy, GMP Securities says

Cannabis sector investors looking for a strong operator with exposure to the U.S. market should take a long look at Trulieve Cannabis Corp.(Trulieve Cannabis Stock Quote, Chart CSE:TRUL), says GMP Securities analyst Robert Fagan.

In a research report to clients Wednesday, Fagan initiated coverage of Trulieve with a “Buy” rating and one-year price target of $26.00, implying a return of 45 per cent at the time of publication.

The analyst says TRUL has jumped out of the gate quickly and is already building an impressive track record.

“With 20 dispensaries currently open, Trulieve has built one of the largest branded retail networks in the US, ahead of several other multi-state operators,” the analyst said. “Trulieve also has one of the largest production footprints we’ve come across, with ~500,000 sq.ft. of operational cultivation/manufacturing space. These facilities are being expanded to reach capacity of 30,000kg by end of 2018, or enough to support ~$350m in sales.

Fagan says the company is something of an innovator.

“Trulieve has a history of product innovation, being the first to introduce several new product categories to the Florida market (vaporizable dried flower, shatter). Trulieve holds a ~75% share of market volumes, but operates only ~40% of Florida’s stores, pointing to strong product quality and service levels which are resonating well with patients. We expect Trulieve’s product innovation should continue to differentiate the company, and help to support its market share.

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Fagan thinks Trulieve will generate EBITDA of $44.1-million on revenue of $97.6-million in fiscal 2018. He expects those numbers will improve to EBITDA of $106.2-million on a topline of $219.5-million the following year.