A quarter he describes as a “blowout” has Echelon Capital analyst Andrew Semple giving Trulieve Cannabis (Trulieve Cannabis Stock Quote, Chart, News CSE:TRUL)a significant price hike.
In a research update to clients Wednesday, Semple maintained his “Buy” rating, but raised his one-year price target on the stock from $23.00 to $33.00, implying a return of 10.4 per cent at the time of publication.
“Trulieve Cannabis Corp. reported blowout Q220 results that exceeded all analyst estimate on both sales and EBITDA,” the analyst explained. “The Company also increased 2020 guidance, which continues to look highly achievable/beatable, in our view. We have made significant recalibrations to our model to reflect the exceptional quarterly results, management’s bullish commentary, and the post-quarter momentum in industry data that suggest further growth ahead.”
Semple thinks TRUL will post Adjusted EBITDA of $232.7-million on revenue of $494.0-million in fiscal 2020. He expects those numbers will improve to EBITDA of $315.9-million on a topline of $692.4-million the following year.
“With a swelling cash balance and significant positive FCF being generated, we expect M&A to be a near-term priority for Trulieve,” the analyst argued. “As such, we adjust our terminal year FCF multiple to 22.5x (prev. 20.0x), as investors appear to already be incorporating the valuation lift anticipated from potentially accretive M&A. We reiterate our Buy rating and increase our target price to C$33.00/shr (prev. C$23.00/shr), primarily driven by estimate revisions and secondarily by the change in the valuation multiple. “