TRUL stock keeps “Buy” rating at Beacon

Beacon Securities analyst Russell Stanley says there is a lot to like about Trulieve Cannabis (Trulieve Cannabis Stock Quote, Chart, News, Analysts, Financials CSE:TRUL).

In a research update to clients January 8, Stanley maintained his “Buy” rating and one-year price target of $23.00 on TRUL, implying a return of 186 per cent at the time of publication.

The analyst says recent balance sheet initiatives demonstrate the company’s cash flow and flexibility.

“With its Q3 results in November, TRUL reiterated its F2023 guidance for operating cash flow of $100M+ and free cash flow of $70M+,” he noted. “During Q4, TRUL repaid $130M in senior secured notes paying 9.75% that were otherwise not due until June 2024. The company also repurchased $57M in principal of its 8% notes due in 2026 at a discount of almost 17%. The company has since closed a 5-year $25M commercial loan paying 8.3%.”

Stanley thinks TRUL will post Adjusted EBITDA of $299-million on revenue of $1.10-billion in fiscal 2023. He expects those numbers will improve to Adjusted EBITDA of $323-million on a topline of $1.16-billion the following year.

Stanley says Trulieve is the cheapest major MSO stock.

“TRUL now trades at 5.7x our F2024 adjusted EBITDA forecast,” he wrote. “This represents a 16% discount to the 6.8x average amongst US operators, and a 37% discount to the 9.0x average amongst the other four major MSOs. The technical picture has improved, with the stock potentially breaking the downtrend that began in September, and showing strongly positive and increasing momentum.”