In a recently released analyst research report, GMP Securities‘ Managing Director of Equity Research for Special Situations and Healthcare, Martin Landry, reiterated his buy rating on shares of Canadian licensed cannabis producer CannTrust Holdings Inc. (NYSE:CTST) (TSX:TRST) with a price target that suggests some big upside to come.
This update comes just hours after Beacon Securities’ Managing Director of Equity Research, Russell Stanley, reiterated his buy rating on shares of CannTrust with the same price target.
Martin Landry’s TRST price target of $15.00 CAD per share implies a potential upside of approximately 79.86% based on the last traded price of $8.34 CAD per share on the Toronto Stock Exchange.
In Landry’s note to clients, he wrote:
“CannTrust’s Q1/19 results showed an improvement in the company’s margin profile which supports its longterm earnings potential. At 12x CY20 EBITDA, TRST’s valuation is attractive relative to its senior peers which trade at over 40x. In our view, the recent pullback in TRST‘s shares presents investors with a compelling entry point. Our target price is derived using a DCF calculation with: (1) an 8% discount rate, (2) a ~6% share of the Canadian recreational market, (3) an average EBITDA margin of 24%, and (4) a terminal growth rate of 3.4%.”
According to Cantech Letter, “Landry thinks TRST will post EBITDA of $8.9-million on revenue of $148.8-million in fiscal 2019. He expects those numbers will improve to EBITDA of $70.6-million on a topline of $287.2-million the following year.”
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