Cannabist stock is a buy, Roth says

Following a management shuffle, Roth MKM analyst Scott Fortune remains optimistic about Cannabist Company Holdings (Cannabist Company Holdings Stock Quote, Chart, News, Analysts, Financials OTCBB:CBSTF)

On January 15, CBSTF reported that David Hart had been appointed CEO and Jesse Channon would move to president from Chief Commercial Officer. Outgoing CEO Nicholas Vita will remain on the board, the company said.

“We all owe Nick a debt of gratitude for having the vision to form what is now The Cannabist Company more than a decade ago,” Hart said. “It was his passion for serving people through cannabis that brought together the best teams and partners to deliver on the promise for our patients and customers. I have had the great pleasure of working with Nick at this Company since 2016, and it is my humble honor to take the reins as CEO, working alongside a tremendously talented leadership team. The strength of the team and continued commitment to serving our communities will carry us into this next exciting chapter. We have implemented strategic organizational changes in recent quarters that have prepared us for this change. We are excited for what lies ahead and eager to continue the progress as The Cannabist Company evolves, from continuing to strengthen the balance sheet to expanding our wholesale program and driving organic growth.”

The analyst offered his take on the development.

“We don’t expect too much change with the management team transition, as both David Hart and Jesse Channon have been integral in running operations over the last 4-5 years,” he wrote. “We believe the ongoing emphasis on improving operations and scaling into its valuable footprint will remain, as Mr. Hart has spent most of his time focused on the operational side, which we believe bodes well for CBST. The company is in 16 markets with a revenue run-rate of over $500M, with some of these markets nearing adult-use sales commencement (NY, OH, VA), or have recently commenced sales (MD, NJ). We believe the state presence alone is one of the most valuable in the U.S. cannabis industry, and optimizing these assets could transform this footprint into a high-margin, leading operator over time.”

In a research update to clients January 16, Fortune maintained his “Buy” rating and price target of $1.00 on CBSTF.

The analyst thinks the company will post EBITDA of $78.2-million on revenue of $511.1-million in fiscal 2023. He expects those numbers will improve to EBITDA of $95.1-million on a topline of $540.4-million the following year.