Beacon chops price target on Green Thumb Industries

Following the company’s fourth quarter results, Beacon analyst Russell Stanley has lowered his price target on Green Thumb Industries (Green Thumb Industries Stock Quote, News, Analysts, Financials CSE:GTII).

On February 26, GTII posted its Q4 and fiscal 2024 results. In the fourth quarter, the company reported Adjusted EBITDA of $98.0-million on revenue of $294.0-million, a topline that was up 6%, year-over-year.

“The Green Thumb team delivered another year of impressive results in 2024. In the fourth quarter, we achieved record high revenue and Adjusted EBITDA of $294 million and $98 million, respectively, and full year cash flow from operations of $195 million, net of the $131 million paid in taxes. We ended the year with a strong balance sheet including $172 million in cash after repurchasing $43 million of company shares,” CEO Ben Kovler said. “Demand for THC in America is at an all-time high, and Green Thumb is well-positioned to deliver on this opportunity. Meanwhile, alcohol consumption trends in America are not positive, as the Surgeon General recently warned of the harms of alcohol and its link to cancer. In contrast, cannabis—now available to more Americans in more locations than ever—is enhancing the well-being of tens of millions across the nation. Over the past decade, our exceptional team has been consistently delivering best-in-class brands and experiences to promote well-being, and we are excited by the promising opportunity that lies ahead.”

In a research update to clients February 27, Stanley maintained his “Buy” rating on GTII, but lowered his price target from $23.00 to $14.00, implying a return of 39% at the time of publication. The analyst explained the reasoning behind the move.

“Management predicted that the double-digit y/y price compression seen in F2024 is expected to continue in F2025, owing to competition (including from widely available, Farm Bill-compliant product) as well as consumer headwinds. Seasonality is expected to reduce top-line revenue by mid-single digits in Q1, and continued investments in the brand may pull adj EBITDA margins below the company’s long-standing 30% target. With the introduction of our F2026 forecast, we are rolling our valuation forward from 12x 2025E adj EBITDA to 7x 2026E adj EBITDA. This multiple represents a modest premium to the median amongst US-listed Canadian LPs of 6.2x, and a premium to the 4.4x average amongst the other four major MSOs. We believe GTII deserves a higher multiple given its relative performance on EBITDA/cash flow margins and recent debt refinancing.”

Stanley thinks Green Thumb will post Adjusted EBITDA of $340-million on Net Revenue of $1.16-billion in fiscal 2025. He expects those numbers will improve to Adjusted EBITDA of $363-million on a topline of $1.26-billion in fiscal 2026.