This pot stock will really benefit from rescheduling, analyst says

Beacon Securities analyst Russell Stanley maintained a “Buy” rating and C$17.00 target on Green Thumb Industries (Green Thumb Industries Stock Quote, Chart, News, Analysts, Financials CSE:GTII) in a May 7 update after first-quarter results beat expectations.

Green Thumb reported Q1 revenue of $300-million and Adjusted EBITDA of $85-million, ahead of Stanley’s $294-million and $83-million estimates and consensus at $298-million and $80-million. Revenue rose 7% year-over-year, helped by Minnesota’s adult-use market opening and strength in Ohio, Maryland, Virginia, Illinois, New York and New Jersey.

Stanley said gross margins were stronger than expected, while EBITDA margins were essentially in line with his forecast. Adjusted for $9-million in brand licensing costs included in COGS, normalized EBITDA was $94-million, or a 31% margin.

Green Thumb generated $76-million in operating cash flow after working capital, ahead of Stanley’s $54-million estimate, and ended the quarter with $346-million in cash and $290-million in debt. The company has repurchased $77-million of stock year-to-date, including post-quarter activity.

Stanley noted that about 50% of Green Thumb’s revenue is medical, meaning the initial U.S. rescheduling order should improve and de-risk its earnings and cash flow profile.

Management also said Green Thumb was conditionally awarded a vertically integrated licence in Texas, which Stanley called a strong long-term opportunity, though operations are likely still a few years away.

Stanley expects Green Thumb to generate Adjusted EBITDA of $328-million on revenue of $1.214-billion in fiscal 2026, improving slightly to $332-million on revenue of $1.261-billion in fiscal 2027.

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