Beacon remains bullish on Trulieve

Following the company’s fourth quarter results, Beacon Securities analyst Russell Stanley thinks there is still a lot of money to be made on Trulieve Cannabis (Trulieve Cannabis Stock Quote, Chart, News, Analysts, Financials CSE:TRUL).

On February 29, TRUL reported its Q4 and fiscal 2023 results. In the fourth quarter, the company posted EBITDA of $73.0-million on revenue of $287.0-million, a topline that was up 4 per cent from the same period a year prior.

“Last year we successfully executed on our plan to bolster our business resilience with a focus on cash generation and preservation while making investments to support future growth,” said CEO Kim Rivers. “Fourth quarter momentum was underpinned by improved consumer trends. We entered 2024 in a position of significant strength just as the outlook for industry growth and reform brightened. With strong cash generation and a clearly defined strategy, Trulieve is best positioned for the coming wave of meaningful growth catalysts.”

Stanley summarized the quarterly results.

“TRUL reported Q4 revenue/adjusted EBITDA of $287M/$88M, beating our street-low forecast of $259M/$64M, consensus at $268M/$72M and the street high estimates at $272M/$78M. We reduced our estimates in early January based on volume sales data for Florida, so the actual results are particularly impressive,” he noted. “Revenue was well above our forecast, and up 4% q/q v. management’s guide to a low single-digit q/q decline from $275M in Q3. Management called out consumer strength and holiday traffic as drivers. Relative to Q3 averages, December traffic was up 100k, units sold were 4% higher, and basket sizes were up 5%. Gross and adjusted EBITDA margins beat our forecast by 256-bps and 569-bps, respectively. TRUL also produced $131M in operating cash flow, or $32M excluding the impact of the company’s new tax strategy v. our forecast of $33M on a fully-280E-taxed basis, and consensus at $36M.”

In a research update to clients March 1, Stanley maintained his “Buy” rating and one-year price target of $23.00 on TRUL, implying a return of 67 per cent at the time of publication.

The analyst thinks TRUL will post Adjusted EBITDA of $323-million on revenue of $1.18-billion in fiscal 2024. He expects those numbers will improve to Adjusted EBITDA of $343.0-million on a topline of $1.24-billion the following year.