iAnthus Capital is trading at a big discount to its peers, says Beacon Securities

While the stock has been battered around as per the recent slump in the cannabis sector, US multi-state operator iAnthus Capital Holdings (iAnthus Capital Holdings Stock Quote, Chart CSE:IAN) continues to show progress in its Florida build-out, says analyst Russell Stanley with Beacon Securities.

On Thursday, Stanley reiterated his “Buy” rating and C$16.00 target on IAN.

iAnthus on Thursday announced the opening of its fourth and fifth dispensaries in the state of Florida, the third-largest state in the US and one which has further growth potential in cannabis, as currently only 17 per cent of authorized retail stores have so far been opened.

“While we are leaving our estimates unchanged, we view the development positively as it represents continued progress in one of the most important cannabis markets in the United States. We understand that IAN’s target is to have 20 dispensaries open in Florida by the end of this year – with leases secured for all of them – and 30 by the end of 2020,” says Stanley.

The analyst contends that IAN is now trading at approximately 9x his 2020 EBITDA estimate, which represents a 61-per-cent discount to the 22x average for its broader peer group, a 71-per-cent discount to the 29x average for companies with plus-C$1 billion market caps and a 23-per-cent discount to the 11x average among US multi-state operators.

Stanley thinks IAN will generate fiscal 2019 revenue and adjusted EBITDA of $182 million and $19 million, respectively, and fiscal 2020 revenue and adjusted EBITDA of $341 million and $121 million, respectively. (All figures in US dollars unless noted otherwise.) His C$16.00 target represents a projected return of 202 per cent at the time of publication.