Should you sell your Cresco Labs stock?

Haywood Capital Markets analyst Neal Gilmer reiterated his “Buy” rating on Cresco Labs (Cresco Labs Stock Quote, Chart, News, Analysts, Financials CSE:CL) while lowering his target price to $2.00 from $2.15 following the company’s fourth-quarter results.

Gilmer said Cresco continues to improve operational efficiency while strengthening its balance sheet.

“Cresco continues to take positive steps towards optimizing its footprint and product portfolio, driving efficiencies across its operations,” he said in a March 5 report. “Management has done a good job of reducing operating costs that supports improved EBITDA as well as cash from operations.”

Cresco reported Q4 2025 revenue of $161.6-million, down 2.0% sequentially and 8.2% year-over-year, broadly in line with expectations. Adjusted gross margins improved to 52.2%, up from 48.8% in the previous quarter and above estimates, helping drive Adjusted EBITDA of $40.4-million, well ahead of forecasts.

The company generated $27.0-million in operating cash flow during the quarter and ended the period with $91.0-million in cash and equivalents. Cresco also refinanced its senior credit facility, leaving the company with a $311.0-million senior secured loan balance.

“With a strengthened balance sheet following the refinancing of its senior credit facility the Company is well positioned entering 2026,” Gilmer said.

Operationally, Cresco ended the quarter with 73 operating dispensaries and reported strong retail productivity, with stores generating roughly 30% more revenue per location than the average competitor in its markets. The company also maintained leading branded market share positions in Illinois, Pennsylvania and Massachusetts.

Management expects Q1 2026 revenue to decline high single digits sequentially due to seasonal factors, pricing pressure and the impact of Michigan tax changes and the company’s exit from California. Gross margins are expected to normalize from elevated Q4 levels.

Following the results, Gilmer modestly trimmed his 2026 revenue forecasts to reflect the softer start to the year but maintained a positive longer-term outlook.

He forecasts Cresco will generate $149.8-million in Adjusted EBITDA on revenue of $630.5-million in fiscal 2026, improving to $158.4-million in Adjusted EBITDA on revenue of $667.0-million in fiscal 2027.

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