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Curaleaf Holdings has massive upside, Beacon Securities says

CURLF stock

Curaleaf HoldingsThe closing of a major acquisition is good news for US cannabis company Curaleaf Holdings (Curaleaf Holdings Stock Quote, Chart, News CSE:CURA), according to Beacon Securities analyst Russell Stanley, who in a Monday update to clients reiterated his “Buy” rating and C$25.00 share price for CURA.

Multi-state operator Curaleaf, which has 53 dispensaries, 15 cultivation sites and 24 processing sites across 14 states, announced on Monday the completion of its purchase of the cannabis business of Cura Partners, namely the Select line of products, a deal first announced last May but which had a number of regulatory approvals to obtain before completion.

Curaleaf CEO Joseph Lusardi called the closing a major milestone in the company’s history, one which ushers in an “unprecedented phase of growth for our company.”

“As we've scaled, Curaleaf has pioneered the U.S. cannabis industry, and we're incredibly excited about the future and our leadership role in it. Our entire organization is focused on accelerating our growth as a combined company with two of the fastest growing cannabis brands in the country,” said Lusardi in a press release.

In his update, Stanley said the closing occurred in line with the company’s predictions.

“This transaction marries Curaleaf’s league-leading retail footprint (now 53 dispensaries, or 79+ pro forma the pending Grassroots transaction) and geographic strength in the Eastern US, with Select’s wholesale dominance and branded product leadership in the Western US,” wrote Stanley.

The analyst noted that Select had already been integrated into his forecast for CURA but he nonetheless is taking the event as a positive for the company.

The acquisition came with some shuffling on CURA’s executive, with Select founder Cameron Forni being appointed President of Select and charged with driving expansion of the Select brand into new markets. At the board level, Dr. Jaswinder Grover is replacing Dr. Steven Patierno.

Stanley says Curaleaf is still undervalued compared to its peers and its stock has an improving technical picture.

“CURA now trades at 5.5x our F2021 EBITDA forecast, representing a 28 per cent discount to the 7.7x average for US operating cannabis companies. Last week’s media reports suggesting that closing was imminent helped the stock back above the accelerated uptrend, and momentum continues to be strong. Potential catalysts include the Q4/19 results, closing of the Grassroots and ATG transactions, and additional M&A,” Stanley wrote.

Stanley thinks CURA will generate fiscal 2020 managed revenue and attributable EBITDA of $1,118 million and $360 million, respectively. (All figures in US dollars unless noted otherwise.)

At the time of publication, Stanley’s C$25.00 share price represented a projected 12-month return of 170 per cent.

The Wakefield, Massachusetts-based Curaleaf last week announced the opening of an adult-use retail dispensary in Provincetown, Mass, the first such dispensary in Cape Cod.

Along with medical operations, Curaleaf opened its first adult-use location in Oxford, Mass, last year.

"As one of the largest cannabis companies in the United States, we are proud to be based
right here in Massachusetts and to be expanding our presence across the Commonwealth," said Lusardi. "Providing high quality and reliable products to patients and customers in our home state is a key part of Curaleaf's mission."

Curaleaf finished 2019 up 27 per cent, while in January of 2020, CURA was up 15 per cent.

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About The Author /

Jayson is a writer, researcher and educator with a PhD in political philosophy from the University of Ottawa. His interests range from bioethics and innovations in the health sciences to governance, social justice and the history of ideas.
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