Trulieve Cannabis gets price target raise at PI

Following the company’s third quarter results, PI Financial analyst Jason Zandberg has raised his price target on Trulieve Cannabis (Trulieve Cannabis Stock Quote, Chart, News CSE:TRUL).

On Monday, Trulieve reported its Q3, 2019 results. The company posted Adjusted EBITDA of $36.9-million on revenue of $70.7-million, a topline that was up 22 per cent over the previous quarter.

“Our third quarter results reflect our continued customer loyalty, growth and leadership position. Trulieve’s strong brand, wide-ranging access to stores and authentic customer experience have resonated with our customers and patients,” CEO Kim Rivers said. “The third quarter was also successful in further strengthening our position in our existing markets as well as preparing for new market entry. We continue to build operational efficiencies and financial discipline to ensure a solid foundation, cash reserves and the right tools at our disposal to expand our footprint. Looking ahead, this is an exciting time as we execute on our strategic vision to be one of the top-performing cannabis companies in North America.”

Zandberg reviewed the quarter, which featured record revenue and what he called “outstanding EBITDA margin.

“Revenue increased by 22% qoq from $57.6M to $70.7M,” the analyst noted. “The increase in revenue was mainly driven by increases in patient count as well as more dispensary openings in Florida. TRUL also generated the highest EBITDA number as well as EBITDA margin (of 39%) compared to its MSO peers. Cash flow from operations before working capital during the quarter was $11.4M.

The analyst pointed out that TRUL now has a market share of 52% in Florida.

“During the quarter, Trulieve’s market share was 52% based on mg THC and CBD dispensed. TRUL operated 35 out of 173 dispensaries operated by 13 approved operators in Q3. TRUL is on track to open a total of 44 dispensaries by year end (TRUL currently operates 39 stores).

Zandberg says Trulieve Cannabis is cashed up and ready to deploy.

“TRUL has proforma cash of $100.8M as of November 15, 2019. Management indicated that they are actively seeking for partnering and expansion opportunities, M&A, as well as organic expansion (through application).

In a research update to clients today, Zandberg maintained his “Buy” rating on Trulieve Cannabis, but raised his one-year price target on the stock from $18.00 to $20.00, implying a return of 29.7 per cent at the time of publication.

Zandberg thinks TRUL will post EBITDA of (US) $102.5-million on revenue of $255.3-million in fiscal 2019. He expects those numbers will improve to EBITDA of $153.0-million on a topline of $400.2-million the following year.

“Management reaffirmed its revenue guidance of $220-$240M in FY19 and $380-$400M in FY20 and EBITDA of $95-$105M in FY19 and $140-$160M in FY20. TRUL revenue FY19 YTD is $173.1M and if the Company hits the high end of its FY19 guidance that means Q4 revenue will be around $67M. Trulieve continues to beat expectations and we believe that TRUL will be able to beat its own guidance given its strong market share, increasing retail number, and increasing patient count,” the analyst added.