Is Cronos Group stock a buy?

Roth Capital analyst Bill Kirk maintained a “Buy” rating and C$ 5.00 target on Cronos Group (Cronos Group Stock Quote, Chart, News, Analysts, Financials TSX:CRON) in a May 11 sales analysis after the company posted a first-quarter revenue and Adjusted EBITDA beat.

Cronos reported Q1 revenue of $45.2-million, ahead of consensus at $42.2-million, while Adjusted EBITDA of $5.1-million beat consensus at $2.3-million and improved from $0.5-million in Q4. Gross margin rose 600 basis points sequentially to 42.4%.

Kirk said the quarter was driven by international momentum and Canadian market-share gains. Israel posted its ninth straight quarter of record revenue, up 53% year-over-year, while the Spinach brand reached the No. 1 vape market-share position in Canada.

“We expect forward quarters to continue the momentum evident in 1Q results,” Kirk said, citing improving GrowCo efficiency and the pending close of the accretive CanAdelaar deal.

Cronos ended the quarter with $822-million in cash and no debt, and authorized a new $50-million share buyback program.

Kirk said Cronos is shifting from a patience-and-cash story to a fundamentally improving business, helped by stronger demand, SG&A savings, added capacity and international growth.

“When the U.S. legislative environment improves, Cronos, with its ample cash balance and retail relationships, should be one of the biggest Canadian beneficiaries,” Kirk said.

Kirk expects Cronos to generate Adjusted EBITDA of $25.0-million on revenue of $198.0-million in fiscal 2026.

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