Investors should be jumping into Green Thumb Industries, Beacon Securities says

Beacon Securities analyst Russell Stanley likes what he sees in the latest quarterly report from Green Thumb Industries (Green Thumb Industries Stock Quote, Chart CSE:GTII).

Maintaining his “Buy” rating and C$44 target in a client update on Wednesday, the analyst says the way forward for the US cannabis company will likely involve strengthening its presence across a number of key states.

Green Thumb released its Q4 and full year fiscal 2018 financials on Tuesday, featuring quarterly revenue of $20.8 million and an Adjusted EBITDA loss of $12.4 million. (All figures in US dollars unless noted otherwise.)

Stanley says that aside from the top line, which came in slightly above his $20.0-million estimate, he viewed management’s update on the company’s progress as a positive.

“Management continues to see numerous acquisition opportunities,” the analyst writes. “While we cannot rule out expansion into additional states, management’s comments imply that the near-term M&A focus will likely involve strengthening GTII’s presence within its existing footprint. GTII exited 2018 with cash of $146 million and debt of $7 million, and even after funding pending transactions, we believe the company is well capitalized to pursue additional growth opportunities.”

Stanley says GTII is currently trading at a multiple of 13x his 2020 EBITDA estimate, which represents a 38-per-cent discount to the 21x multiple of its broader peer group and a 67-per-cent discount to the 39-per-cent multiple among cannabis companies with a C$1-billion-plus market cap.

“Our 12-month target price represents a potential return- to-target of 126 per cent, making this a compelling entry point for investors,” he adds

The analyst expects GTII to generate fiscal 2019 revenue and Attr. EBITDA of $226.5 million and $38.8 million, respectively, and fiscal 2020 revenue and Attr. EBITDA of $523.5 million and $195.9 million, respectively.