In a recently released analyst research report, Beacon Securities Managing Director of Equity Research, Russell Stanley, reiterated his buy rating on shares of multi-state U.S. operator Curaleaf Holdings Inc. (CSE:CURA) (OTC:CURLF) with a price target that suggests some noteworthy upside to come.
This guidance update comes on the heels of Curaleaf’s recent acquisition of the exclusive rights to operate the Emerald dispensary in Gilbert, Arizona, whose license is held by Absolute Healthcare, Inc., a non-profit corporation. The dispensary will be rebranded as Curaleaf after the transaction closes.
Curaleaf’s Acquisition of Emerald
The acquisition of the Emerald dispensary marks Curaleaf’s sixth cannabis dispensary in Arizona and secures a presence within short proximity to Phoenix. As the only marijuana dispensary in the Town of Gilbert, this also gives Curaleaf an in-town monopoly that has served over 44,000 different patients since opening its doors in 2014.
“This store fits very well into our existing footprint in Phoenix and is expected to be immediately accretive,” said Joseph Lusardi, Chief Executive Officer. “Combining Emerald’s large patient base with Curaleaf’s established supply chain is anticipated to generate strong earnings and enhance patient care in Arizona.”
Total consideration for the transaction was $18 million, of which $10 million in cash was paid into escrow on May 17, 2019, $5 million in cash is payable six months after the closing, and $3 million in cash is payable 12 months after the closing, which is subject to regulatory approval.
Stanley is Bullish on Curaleaf Due to its Valuation
Russell Stanley’s price target of $23.00 CAD per share implies a potential upside of approximately 79.97% based on the last traded price of $12.78 CAD per share on the CSE.
In his note to clients, Stanley said that “CURA now trades at approximately 17x our 2020E attributable EBITDA forecast. This represents a 22 per cent discount to the 21x average for the broad peer group, and a 53 per cent discount to the 36x average for companies with a plus-C$1B market capitalization.”
Curaleaf’s Upcoming Q1 Earnings Expectations
With Curaleaf Holdings expected to report its financial and operating results for the first quarter ended March 31st, 2019 after the market close on Thursday, May 30th, 2019, Stanley also provided investors with a bit of guidance on what to expect.
According to Cantech Letter, “Ahead of CURA’s first quarter 2019 results due on Thursday, May 30, Stanley is expecting IFRS revenue of $36.5 million (consensus $37.4 million) and an EBITDA loss of $3.1 million (consensus $2.5 million). (All figures in US dollars unless noted otherwise.)”
Shortly after earnings are announced on the 30th, Curaleaf management will be hosting a conference call and audio webcast that evening at 6:00 p.m. EDT to answer questions about the Company’s operational and financial highlights.
Those interested in listening in to the Curaleaf earnings call can dial in via the following:
Event: Curaleaf First Quarter 2019 Financial Results Conference Call
Date: Thursday, May 30, 2019
Time: 6:00 p.m. EDT
Live Call: +1-877-407-9039 (U.S. Toll-Free) or +1-201-689-8470 (International)
For interested individuals unable to join the conference call, a dial-in replay of the call will be available until June 13, 2019, and can be accessed by dialing +1-844-512-2921 (U.S. Toll-Free) or +1-412-317-6671 (International) and entering replay pin number: 13691231.
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