This pot stock was just named “Top Pick” by Haywood

Haywood Capital Markets analyst Neal Gilmer, in an August 11 report, maintained a “Buy” rating and $19.00 target on Green Thumb Industries (Green Thumb Industries Stock Quote, Chart, News, Analysts, Financials CSE:GTII) after the company posted Q2 results that topped revenue expectations and matched Adjusted EBITDA forecasts.

Gilmer noted that Green Thumb’s market diversity and tight cost controls have kept results stable, with the company generating $56.5-million in operating cash flow for the quarter.

“We believe Green Thumb’s strong track record and balance sheet leave it well-positioned to maintain its leadership in the U.S. cannabis market,” he said. “We reiterate our Top-Pick and ‘Buy’ recommendation. We continue to favour the U.S. cannabis market and GTI continues to demonstrate a leading position in the industry. The company has regularly reported strong financials with consistently strong revenue growth combined with impressive margins. We continue to recommend investors have exposure to GTI.”

Cannabis consumer goods company Green Thumb Industries is a U.S.-based multi-state operator headquartered in Chicago, IL.

The company reported operating cash flow of $56.4 million and free cash flow of $37.4 million in the quarter. Green Thumb ended the period with $176.9 million in cash and $250 million in debt, or $522.7 million when including lease liabilities.

“We continue to view Green Thumb’s balance sheet as the strongest in the sector, particularly after securing the credit facility in September that, combined with cash on its balance sheet, helped retire the $225M in notes due April 2025,” Gilmer said.

He said Green Thumb repurchased 5.6 million shares in Q2 for about $24-million, averaging $4.28 per share. In total, 13.5 million shares have been repurchased to date at an average of $7.96. Quarterly net revenue increased 4.7% year-over-year, led by 16.5% growth in wholesale revenue, which made up 30% of total sales. Retail revenue edged up 0.3% from last year, as new locations were offset by industry-wide price pressure, while comparable store sales fell 4.1% from a base of 91 stores. Q2 net revenue came in at $293.3-million, up 4.7% year-over-year and 4.9% sequentially, exceeding both the $279.9-million projection from Haywood and the $280.6 million consensus.

Growth was driven by wholesale gains in Illinois, Pennsylvania, and New Jersey, along with market share expansion in the vape and pre-roll segments. Gross margin was 49.9%, slightly below expectations due to a higher CPG sales mix. Adjusted EBITDA was $82.7-million (28.2% margin), close to both firm and Street forecasts. Green Thumb produced $56.4-million in operating cash flow and ended the quarter with $176.9-million in cash and $522.7-million in total debt, primarily from its September 2024 credit facility.

“We have updated our model following a review of the full financials,” Gilmer said. “Green Thumb guided for Q3 revenue to be flat to down low single digits in light of price compression and macro uncertainty. Furthermore, management indicated it expects EBITDA margins to remain below its long-term target of 30% in the coming quarters. Given the strength of its balance sheet as well as cash flow generation, we maintain GTI as our top pick. We have made some minor revisions to our estimates, but nothing overly material, in our view.

“We maintain our Buy recommendation and target price of $19.00 based on 11.5x our 2026 EBITDA estimate discounted at 15%.”

Gilmer said that Green Thumb should do $331.0-million in Adjusted EBITDA on revenue of $1,162.9-million in fiscal 2025. He thinks those numbers will improve to $351.6-million on revenue of $1,202.1-million in fiscal 2026.

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