Green Thumb Industries is worth $24.00, Beacon Securities says

US cannabis company Green Thumb Industries (Green Thumb Industries Stock Quote, Chart, News CSE:GTII) is now well positioned in the up-and-coming state of Ohio, says Beacon Securities analyst Russell Stanley who issued an update on the company on Monday where he reiterated his “Buy” rating and C$24.00 target price.

Chicago-based Green Thumb, which has 13 manufacturing facilities, licenses for 96 retail locations and operations across 12 US markets, announced on Monday the opening of a new retail outlet in Lakewood, a suburb located seven miles west of Cleveland.

Under GTI’s Rise brand, the store represents the company’s fifth such store in Ohio (the state maximum for any one cannabis company) and the second in Lakewood, while across the country, it’s now GTI’s 43rd outlet.

“As a designated essential business during the ongoing COVID-19 crisis, we are honoured to provide cannabis to more members of the community with a second location in Lakewood,” said GTI Founder and CEO Ben Kovler in a press release. “We are grateful to be able to promote well-being through the power of cannabis, especially during these stressful and uncertain times.”

Ohio, which started selling legal medical marijuana in early 2019, while as of February 2020, the state had 88,306 registered patients for a penetration rate of less than 0.8 per cent (Ohio is the seventh-largest state in the US with a population of 11.7 million).

Stanley characterized Ohio’s start as modest but with lots of potential, a good sign for GTI.

“Should Ohio reach Arizona-like penetration rates of 2.9 per cent, Ohio’s patient count could reach 340,000 once product supply improves. We view that as achievable given a strong list of allowable conditions, with local media estimating that up to 3.5 million Ohioans could qualify for medical cannabis use,” Stanley wrote.

“More recently, sales for the week ended April 6th totalled $3.4 million, up from $2.7 million in the prior week, and implying a $175 million per year run rate. This follows record sales in March of just under $13 million. The state has issued just 57 provisional dispensary licenses to date (or one per 205,000 residents). With today’s opening, GTII owns 5 of the 51 dispensaries that have begun operations, positioning the company very well to participate in the growth of this market,” he wrote.

Outside of Ohio, Stanley noted that the municipality of Naperville, Illinois, is closer to allowing adult-use, where GTI has a currently medical-only dispensary, with management saying it hopes to make the store open for adult-use at some point in 2020.

Stanley estimates that GTI now trades at a 25 per cent discount to its US Multi-state- operator peers and at a 53-per-cent discount to its broader cannabis peer group. Looking ahead, the analyst sees Green Thumb generating fiscal 2020 revenue and attributable EBITDA of $456 million and $117 million, respectively, and fiscal 2021 revenue and attributable EBITDA of $760 million and $266 million, respectively.

His C$24 target at press time represented a projected return of 198 per cent. (All figures in US dollars except where noted otherwise.)