Cresco Labs is a buy, this analyst says

On Nov. 5, Haywood Capital Markets analyst Neal Gilmer maintained his “Buy” rating and US $2.00 target price on Cresco Labs (Cresco Labs Stock Quote, Chart, News, Analysts, Financials OTCBB:CRLBF), saying the company continues to streamline operations while positioning for international expansion.

Cresco reported third-quarter revenue of US$164.9-million, up 0.8% sequentially and down 8.3% year over year, in line with Haywood’s US$163.6-million estimate and the US$163.8-million consensus. Adjusted EBITDA came in at US$39.8-million, above the firm’s US$36.0-million forecast, with an Adjusted EBITDA margin of 24.3%. Gross margin was 48.8%, slightly below Q2’s 50.6% but ahead of expectations. The company generated US$6.2-million in operating cash flow, ended the quarter with US$82.0-million in cash, and carried a US$309-million senior secured loan net of discounts and issuance costs.

Gilmer said the results were “solid given a challenging macro backdrop,” highlighting improved efficiency and better-than-expected margins. The completed exit from California “simplifies Cresco’s footprint and removes low-margin operations,” he said, noting the company can now focus on its strongest markets and opportunities for margin expansion in 2026.

Cresco also announced plans to enter international markets, beginning with a launch of its branded flower in Germany “through an asset-light, test-and-learn approach.” Operationally, the company expects to open two new dispensaries in Ohio early in fiscal 2026, while digital engagement continues to rise, 77% of Q3 customers were digital shoppers, and 62% of Q2 customers returned in Q3.

Following the quarter, Gilmer made modest adjustments to his model to reflect the California exit and flat near-term revenue expectations. He said Cresco remains one of the most established U.S. multi-state operators, emphasizing its consumer-packaged-goods strategy built around a “house of brands,” including Cresco, Reserve, Mindy’s, and Good News. The company has major operations in Illinois and exposure to medical markets in Ohio, Florida, and Pennsylvania.

“We continue to view Cresco favourably,” Gilmer wrote. “Management has done a good job optimizing the footprint and driving efficiencies across operations.”

Gilmer forecasts Adjusted EBITDA of US$150.0-million on US$654.5-million of revenue in fiscal 2025, improving to US$155.6-million on US$664.7-million in 2026.

He said the company’s strategic focus, strong management team, and entry into new markets “should position Cresco for steady growth into 2026.”