Trulieve scores price target raise at Echelon

Following the company’s most recent results, Echelon Capital Markets analyst Andrew Semple has raised his price target on Trulieve Cannabis (Trulieve Cannabis Stock Quote, Chart, News, Analysts, Financials CSE:TRUL).

On May 9, TRUL reported its Q1, 2024 results. The company posted EBITDA of $85.0-million on revenue of $298.0-million, a topline that was up 4% year-over-year.

“With strong performance in our core business and several meaningful catalysts on the horizon, the outlook has never been brighter,” said CEO Kim Rivers. “The team has done a phenomenal job carrying forward the momentum from last year, driving further improvements in production and retail. Given our financial performance and significant scale in key markets, Trulieve is best positioned for the coming wave of growth catalysts.”

The analyst said this result is a clear positive for TRUL.

“Trulieve Cannabis Corp. reported Q124 financial results that meaningfully beat forecasts,” he wrote. “Revenue, margins, and adjusted EBITDA were all well ahead of our estimates and the consensus. This is the second consecutive quarter where Trulieve has beat our adj. EBITDA estimates by a sizable margin, as dwindling inventory liquidation activity and production from the Company’s Jefferson County automated facility account are driving strong margin improvements. The Company had significant FCF generation of $124M during the quarter ($27M excluding tax items). Trulieve ended the quarter with a massive $327M cash balance, providing it with plenty of optionality for organic or acquisitive growth ahead.”

In a research update to clients May 9, Semple maintained his “Buy” rating on TRUL but raised his target price on the stock from $15.00 to $19.00, implying a return of 20.7% at the time of publication.

The analyst thinks TRUL will post Adjusted EBITDA of $373.9-million on revenue of $1.19-billion in fiscal 2024. He expects those numbers will improve to Adjusted EBITDA of$374.8-million on a topline of $1.24-billion in fiscal 2025.

“We reiterate our Buy rating and increase our price target to C$19.00/shr (prev. C$15.00) based on a DCF valuation of C$18.63/shr (prev. C$15.38/shr),” Semple added. “The change in the DCF valuation was due to higher financial forecasts for sales and EBITDA, primarily driven by a meaningful improvement to operating momentum in Florida. Notably, our 2024 EBITDA forecastsincreased by 16.0% relative to our prior forecasts. We continue to believe that our forecasts are conservatively positioned since we do not yet incorporate the Company’s existing medical markets (e.g., Florida, Pennsylvania) transitioning to adult-use sales, nor do we assume any potential benefits from federal cannabis reform, events that could represent material upside to Trulieve in the coming years.”