Green Thumb Industries still a buy despite “mixed” Q3 results: GMP

Following the company’s third quarter results, GMP Securities analyst Robert Fagan is maintaining his “Buy” rating on Green Thumb Industries (Green Thumb Industries Stock Quote, Chart: CSE:GTII), though the analyst has lowered his price target.

On Tuesday, Green Thumb reported its Q3, 2018 results. The company lost (US) $3.33-million on revenue of $17.2-million, a topline that was up 333 per cent over the same period last year.

“This was another quarter of solid financial and operational results as we build our foundation for the future,” CEO BEn Kovler said. “We have been focused on expanding wholesale capacity to meet increasing demand, opening new RISE{A ™} stores and are unwavering in our diligent effort building a world-class team. To support our strong retail pipeline, we added experts to the team in retail operations, real estate, design and construction, and marketing and communications from retail giants such as Nordstrom, Starbucks, Home Depot, Whole Foods, Apple and Nike. We are excited about what’s ahead for RISE{A ™} as we accelerate the growth of this exceptional business.”

Fagan says this was a “mixed” quarter, with the company’s bottom line coming in a little worse than expected. But overall, he says he is still bullish on the stock.

“While GTI’s expansion plans could have a short-term impact on margins, we view it as a strategic investment to create future value,” the analyst says. “We note the impact is not dramatic with only minor changes to forecasts. We continue to view GTI as a top tier multi-state operator, positioned in attractive states with robust growth potential and multiple catalysts.”

In a research update to clients today, Fagan maintained his “Buy” rating on Green Thumb Industries, but lowered his one-year price target on the stock from $35.00 to $32.00, implying a return of 119.2 per cent at the time of publication.

Fagan thinks GTII will post EBITDA of negative $2.3-million on revenue of $62.2-million in fiscal 2018. He expects those numbers will improve to EBITDA of positive $50.8-million on a topline of $208.1-million the following year.