We’re still bullish on Cresco Labs, this analyst says

Roth Capital analyst Bill Kirk maintained a “Buy” rating and $2.00 target on Cresco Labs (Cresco Labs Stock Quote, Chart, News, Analysts, Financials CSE:CL) in a May 11 sales analysis after first-quarter results showed a modest revenue beat but slight Adjusted EBITDA miss.

Cresco reported Q1 revenue of $151.3-million, ahead of consensus at $148.8-million, but down 6.3% sequentially and 8.7% year-over-year. Adjusted EBITDA was $32.9-million, below consensus at $33.7-million, with a 21.7% margin.

Kirk said results were pressured by ongoing price compression, Michigan excise tax changes and Cresco’s exit from California. Gross margin improved to 50.0%, or 50.7% adjusted, as the company prioritized higher-margin opportunities, though that also weighed on wholesale revenue.

For Q2, Cresco guided to about 10% sequential revenue growth, the strongest in Kirk’s cannabis coverage, helped by two new Ohio stores and the acquisition of nine Pennsylvania locations. Excluding that expansion, the base business is expected to grow in the low single digits.

Kirk said Cresco’s conditional Texas licence was rescinded after the state re-tabulated application criteria and moved the company to the TCUP eligibility list.

“The scoring methodology used to measure applicants did not apply the proper weights in the calculations, and the new calculations led to a different ranking of submissions,” Kirk said. “Cresco remains on the TCUP ‘license eligibility list,’ but exposure to an exciting market is now in doubt.”

Kirk said Cresco still holds leading positions in Illinois, Massachusetts and Pennsylvania, while maintaining strong product-level share in concentrates, flower, vapes and edibles.

He now forecasts fiscal 2026 revenue of $651.1-million and Adjusted EBITDA of $144.4-million.

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