Ahead of the company’s Q3 results, Beacon analyst Russell Stanley has maintained his “Buy” rating on Trulieve Cannabis (Trulieve Cannabis Stock Quote, Chart, News, Analysts, Financials CSE:TRUL).
On November 5, TRUL will report its third quarter results. The analyst broke down what he expects from the report.
“We are looking for revenue/adj EBITDA of $282M/$77M v. current consensus of $291M/$88M, with our forecasts representing street lows for revenue (ranging $282-$295M) and adj EBITDA ($77-$92M),” he wrote. “We have trimmed our estimates from our prior set ($290M/$82M) to better reflect the company’s Florida sales volumes right at quarter end, with flower and oil-based product sales down 7% and 8% w/w, respectively, the week following Hurricane Helene. During its Q2 call in August, management guided to a mid-single-digit q/q revenue decline in Q3, citing seasonally weak foot traffic in Arizona and Florida. Our top line forecast now assumes a 7% q/q decline, down from a 5% decline previously (current consensus implies a 4% q/q decline). We add that TRUL has beaten street high revenue/adj EBITDA estimates for three straight quarters. In addition to the results, we will be looking for an update on TRUL’s F2024 guidance. In August, Trulieve increased its operating cash flow guidance to $250M+ from $225M+, having already realized $210M during H1. The company also increased its CAPEX forecast from $70M to $100M. TRUL reiterated its gross margin guidance (mid-50s+ for the remainder of F2024) while adding that OPEX will likely increase in H2.”
In a research update to clients October 15, Stanley maintained his “Buy” rating and price target of $25.00 on TRUL, implying a return of 54% at the time of publication.
Stanley thinks TRUL will post Adjusted EBITDA of $379.0-million on revenue of $1.19-billion in fiscal 2024. He expects Adjusted EBITDA of $367.0-million on revenue of $1.24-billion in fiscal 2025.
The analyst says the company’s stock performance has left the competition behind.
“TRUL is now up 238% since the HHS recommendation to reschedule cannabis became known in late August 2023. That is more than 6x the 37% average return amongst the other four major MSOs during that period, with their returns ranging 13% to 62%. TRUL’s technical picture continues to look constructive, with the stock still trending higher and continuing to outperform the benchmark (MSOS-NYSE, Not Rated). TRUL now trades at 8.5x our F2025 adj EBITDA forecast of $367M (below consensus of $385M), representing a 27% premium to the 6.7x average amongst the other four major MSOs. The adult-use proposal contemplates the AU market opening in May 2025, pending voter approval. Assuming Florida sees a 2-3x market expansion upon the AU opening, we estimate TRUL’s annualized
EBITDA would improve to $550-$733M (all else equal), with the stock now trading at 4.2-5.7x those scenarios.”
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