Green Thumb wins price target raise at Echelon

Following record fourth quarter results, Echelon Capital Markets analyst Andrew Semple has raised his price target on Green Thumb Industries (Green Thumb Industries Stock Quote, Chart, News, Analysts, Financials CSE:GTII).

On February 28, GTII reported its Q4 and fiscal 2023 results. In the fourth quarter, the company posted Adjusted EBITDA of (All figures USD) $$91.0-million on revenue of $278.0-million, a topline that was up 7 per cent over the same period a year prior.

“As I reflect on the past year, the Green Thumb team has been amazing,” CEO Ben Kovler said. “We delivered a strong fourth quarter, including record revenue of $278 million, record Adjusted EBITDA of $91 million, and full year 2023 cash flow from operations of $225 million-all the while investing over $200 million in capex to fuel future growth. We ended the year with a strong balance sheet including $162 million in cash, net of $65 million returned to shareholders via share buybacks and debt repurchases. In 2023, we completed our major capex program that spanned over the past couple of years. With this heavy investment lift behind us, our Board of Directors authorized Green Thumb’s first share repurchase program to return capital to our valued shareholders, and I am pleased to announce that this morning, our Board of Directors approved an additional $50 million for the program. As I look to the future in 2024 and beyond, I am very optimistic-we have industry-leading brands that are gaining momentum, the best team in the business, a loyal and growing customer base, and the financial flexibility to keep riding the Green Wave.”

The analyst said this was a strong quarter and he reflected on where GTII is at the moment and where it could get to.

“Our outlook for 2024 continues to reflect that GTI’s relatively mature ‘cash cow’ states should remain reasonably stable from a cashflow perspective. Should its more mature markets hold steady, it could allow GTI’s new emerging markets – such as new adult-use programs in New Jersey, Connecticut, Ohio, Maryland, and New York, as well as emerging medical markets in Virginia and Minnesota – to drive top-line growth at the consolidated level in 2024,” he wrote. “We view GTI as a top-quality US cannabis operator, with an excellent track record of positive earnings and a deeper organic growth pipeline than most other MSOs. GTI maintains a healthy balance sheet with a QE cash balance of $162M and no major near-term liquidity concerns (its most sizeable liability of $225M of senior debt matures in 2025). GTI’s financial flexibility is increasingly important as capital market conditions remain a primary concern for US cannabis companies. The Company is well-equipped to weather near-term market headwinds, and we expect it will be able to absorb further market share as capital-starved privately held companies gradually exit the industry.”

In a research update to clients February 29, Semple maintained his “Buy” rating on GTII, but raised his price target on the stock from $21.00 to $23.00, implying a return of 34.3 per cent at the time of publication.

The analyst thinks Green Thumb will post Adjusted EBITDA of $346.0-million on revenue of $1.13-billion in fiscal 2024. He expects those numbers will improve to Adjusted EBITDA of $389.8-million on a topline of $1.22-billion in fiscal 2025.