Buy TerrAscend ahead of Thursday’s results, Beacon Securities says

Ahead of Thursday’s fourth quarter results, Beacon analyst Russell Stanley is maintained his “Buy” rating on TerrAscend (TerrAscend Stock Quote, Chart, New, Analysts CSE:TER).

On Thursday, March 16, TerrAscend will report its financial results for the fourth quarter and full year 2022 the same day after market close and host a conference call to discuss the results.

US multi-state operator in the cannabis industry, TerrAscend has vertically integrated production and retail in Pennsylvania, New Jersey, Maryland and Michigan and is a leading retailer and cultivator in Northern California.

Stanley outlined what he will be looking for from TER.

“TER is a top 3 player in NJ. On the retail front, during the November earnings call, management reported that two of its three dispensaries (Maplewood and Philipsburg) were 90% of the way to the $40M revenue run rate previously targeted. We will be looking for an update on those locations, as well as the Lodi store, which opened early in Q3. We are also interested in management’s views on how many new dispensaries may open in F2023, given that will drive growth of the addressable wholesale market,” the analyst said. “We are also interested in management’s update on its wholesale operations in Pennsylvania, where other vertically integrated operators have focused on sales of house brands vs. 3rd party products, to the near-term detriment of wholesalers. Management’s outlook for adult-use legalization in PA will also be of interest, as the associated market expansion would likely tighten the market up.”

In a research update to clients Monday, Stanley maintained his “Buy” rating and one-year price target of $2.75 on TerrAscend, implying a return of 30 per cent at the time of publication.

Stanley thinks TER will post Adjusted EBITDA of $31-million on revenue of $249-million in fiscal 2022.