Progress in the United States has Beacon Securities analyst Russell Stanley maintaining his bullish stance on Green Thumb Industries (Green Thumb Industries Stock Quote, Chart, News CSE:GTII).
On Monday, Green Thumb announced that it had closed the acquisition of New York-based Fiorello Pharmaceuticals, which is one of just ten companies approved to operate a medical marijuana company in that state.
GTII management noted that New York’s medical marijuana market has in excess of 105,000 registered patients, with 15 conditions that qualify, including PTSD and chronic pain. The state also includes a provision that allows home delivery.
“As one of only 10 licence holders in a state with a population of approximately 20 million, this acquisition is firmly in line with our strategic goal of entering highly regulated markets to manufacture and distribute cannabis brands at scale,” Green Thumb CEO Ben Kovler said. “We believe entry into New York is an important milestone as we empower the right to wellness through responsible increased access to cannabis and are privileged to serve the people of New York seeking relief and an enhanced quality of life.”
Stanley summarized the development.
“Earlier today, GTII announced it has closed the acquisition of FP Fiorello Pharmaceuticals, known locally as FP Wellness,” he noted. “This is one of just 10 companies licensed to serve New York’s medical market. Each licensee is authorized to open one cultivation/manufacturing facility (GTII’s is in Schenectady County) and four dispensaries (GTII’s are in Manhattan, Rochester and Halfmoon, with a 4th planned for Nassau County). The purchase price included $46M in cash, plus 1.7M subordinate voting shares with a current value of $17.9M, giving the total purchase price a current value of $63.9M. We view this announcement positively, as acquisitions in NY have generally required more time to close then originally expected. While the medical program had a modest 105,000+ patients (0.5% of the population vs. 2.9% penetration in Arizona) as of August 20th, local media reports indicate that Governor Cuomo is likely to work on including adult-use legalization measures in his next budget, in 2020.”
Green Thumb Industries: stock has huge upside, says analyst…
In a research update to clients Monday, Stanley maintained his “Buy” rating and one-year price target of $44.00 on Green Thumb Industries, implying a return of 313 per cent at the time of publication.
Stanley thinks GTII will post Attr. EBITDA of $32.6-million on revenue of $227.7-million in fiscal 2019. He expects those numbers will increase to Attr. EBITDA of $198.0-million on a topline of $523.5-million the following year.
Stanley also makes note of the company’s opportunity in Ohio, which he believes will be another significant market.
“The company also recently announced that it had been awarded a cultivation license in OH, following an appeal,” Stanley writes. “Green Thumb already owns/operates three dispensaries, located in Cleveland, Toledo and Lorain. The company plans to open two more this year (both in Lakewood, a suburb of Cleveland), and it also has a processing facility under construction. Ohio’s medical market just opened in January, and just 26 of the 56 dispensaries licensed to date have received certificates of operation that allow them to open. It has approximately 53,000 registered patients, of which just over 30,000 have actively purchased cannabis to date, with a lack of supply/high pricing reportedly slowing patient growth. However, the state’s list of allowable medical conditions is very attractive, such that 3.5M Ohioans would qualify for medical use. We therefore believe this will become one of the strongest medical markets in the US, and GTII is now well positioned to serve both its wholesale and retail markets.”