Pot stock CannTrust Holdings has a lot of upside, Beacon Securities says

Expect higher revenue growth in the second quarter for cannabis company CannTrust Holdings (CannTrust Holdings Stock Quote, Chart TSX:TRST), says analyst Russell Stanley of Beacon Securities, who in a Monday update to clients maintained his “Buy” recommendation and $15.00 target price, representing a projected return of 45 per cent at the time of publication.

Vaughan, Ontario’s CannTrust announced on Monday that it had its cultivation and processing permit from Health Canada amended to include the final 20 per cent of its Phase 2 expansion. The full 450,000 sq ft of its greenhouse in Pelham, Ontario, is now fully licensed and should be at full capacity by the end of the second quarter.

“We have always been confident that our processes meet and exceed regulatory standards, and we now have further validation of this from our regulators,” said Peter Aceto, CEO, in a press release. “With this approval, CannTrust is set to meet its plan to reach 50,000 kg of annualized capacity at the perpetual harvest greenhouse and continue providing award-winning products in a cost-effective manner.”

Stanley says that the added revenue should be reflected in the company’s Q2 in August. The analyst maintains that CannTrust is trading at a discount to its peers, saying,

“TRST is now trading at 15x our estimate for 2020E EBITDA. This represents a 59 per cent discount to the 37x average amongst cannabis companies with a C$1 billion-plus market capitalization, and a 78 per cent discount to the 68x average that US-listed cannabis companies trade at.”

The analyst is forecasting TRST to generate 2019 revenue and EBITDA of $122 million and negative $11 million, respectively, and 2020 revenue and EBITDA of $283 million and $76 million, respectively.