This weed stock will beat the market, analyst says

Russell Stanley of Beacon Securities maintained a “Buy” rating and C$5.00 price target on Verano Holdings (Verano Holdings Stock Quote, Chart, News, Analysts, Financials CBOE:VRNO) following fourth-quarter results and a refinancing that he said removes a key overhang on the stock.

In a March 16 report, Stanley said the Chicago-based cannabis operator delivered solid Q4 results and recently completed a $195-million senior secured term loan, refinancing debt that had been due later this year.

“In our view, this milestone eliminates the market’s last reasonable ‘excuse’ to give Verano the lowest valuation multiple amongst the five major MSOs we cover,” he wrote.

Verano operates 157 retail stores across 13 U.S. states and 15 cultivation and production facilities covering roughly 1.1 million square feet.

The company reported Q4 revenue of $207-million and Adjusted EBITDA of $56-million, slightly ahead of Stanley’s forecasts of $202-million and $54-million. Gross margins beat expectations by 260 basis points, improving 188 basis points year-over-year and 420 basis points sequentially, though higher operating expenses partially offset the gains.

Alongside the results, Verano closed a $195-million term loan priced at Term SOFR plus 5.5%, with a 4% SOFR floor, and drew the remaining $50-million available under its expanded $100-million revolving credit facility. The proceeds were used to repay a $241-million credit facility previously due in October. Management expects the refinancing to generate more than $10-million in annual interest savings.

Stanley noted the new three-year loan includes an option to extend for a fourth year and modest early repayment penalties that disappear after two years. Verano founder and CEO George Archos also contributed $10-million to the loan, which Stanley said reflects management confidence.

He added that Verano currently trades at roughly 4.5 times Beacon’s 2027 Adjusted EBITDA estimate, representing a 33% discount to the 6.5-times average valuation of other major multi-state cannabis operators, including Cresco Labs.

Stanley said Verano also offers exposure to two potentially significant growth markets: Virginia, where lawmakers have passed legislation that could allow adult-use cannabis sales beginning in January 2027, and Texas, where the company recently received a conditional licence to operate in the medical cannabis market.

Beacon forecasts fiscal 2026 revenue of $828-million and Adjusted EBITDA of $222-million, improving to $863-million in revenue and $242-million in Adjusted EBITDA in fiscal 2027.

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