Cresco Labs is still undervalued, this analyst says

Beacon Securities analyst Russell Stanley noted August 14 that Cresco Labs (Cresco Labs Stock Quote, Chart, News, Analysts, Financials CSE:CL) has completed its previously announced debt refinancing, closing on a five-year, $325-million senior secured term loan paying 12.5%. The analyst maintained his “Buy” rating and $1.75 price target on the stock.

The new loan replaces the prior $360-million facility that was set to mature in August 2026. It also allows for up to $125-million in prepayment at a reduced premium, which Stanley said gives the company added flexibility.

“Cresco has also become the first of the four major MSOs to have refinanced a significant F2026 maturity,” he said.

Cresco is a U.S. cannabis company with cultivation, manufacturing, distribution, and retail operations under the Sunnyside store brand. It operates in eight states, including California, Florida, Illinois, and Pennsylvania, following a consumer packaged goods model to distribute its own brands.

Stanley said management’s comments on potential M&A were “the most bullish we heard from the major MSOs during reporting season,” noting that tough operating and regulatory environments are forcing weaker and more highly leveraged competitors to downsize.

“By state-count, Cresco’s operating footprint is the smallest amongst the major MSOs, and it is now well positioned to add New Jersey, Maryland and/or Connecticut to its network, whereas other major MSOs already have a presence in some/all of those states,” he said. “We can also envision Cresco going deeper in existing markets like Ohio, Pennsylvania, Illinois and Florida.”

Stanley added that investor sentiment has improved materially following reports that President Trump is considering cannabis rescheduling

“Almost a year ago, he endorsed Rescheduling along with cannabis banking legislation and Florida’s adult-use legalization effort during his campaign, but his recent comments are the first we have heard from him on this subject since his election. Cresco has rallied 150% since making new 52-week lows on June 23rd.”

The analyst said Cresco now trades at 5.7x his F2026 Adjusted EBITDA forecast, a 23% discount to the 7.5x average of the other four major MSOs.

Stanley said Cresco should do $151-million in Adjusted EBITDA on revenue of $660-million in fiscal 2025. He thinks those numbers will improve to $176-million on revenue of $720-million in fiscal 2026.

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