Cannabis company Green Thumb Industries reported 3Q sales of $157.1 million, reflecting a 131.1% increase year-over-year, and exceeding analysts’ estimates of $135.5 million. Shares rose about 2% in the extending trading session on Wednesday.
Green Thumb’s (GTBIF) revenue growth was driven by increased scale in its consumer packaged goods and retail businesses, particularly in Illinois and Pennsylvania, the company said. Notably, expanded distribution of the company’s branded products, opening of 15 new stores and higher traffic at the 48 existing retail stores boosted the top line during the quarter.
Higher revenue and operating leverage helped the company flip to EPS of $0.04 in 3Q20 from a loss per share of $0.06 in 3Q19. Analysts had expected the company to report break-even EPS.
Commenting on the 3Q performance, Green Thumb CEO Ben Kovler stated “This was an excellent quarter for Green Thumb as we delivered substantial revenue growth and our ‘Enter, Open, Scale’ strategy is generating meaningful operating leverage across our business.”
“We expanded gross margins and EBITDA margins quarter-over-quarter while delivering positive net income for the first time. This was driven by the execution of our capital projects in Illinois, New Jersey, Pennsylvania and Ohio, and the rebound in our Nevada and Massachusetts markets following the initial impact of COVID-19,” Kovler added.
Separately, the company also announced the opening of its 50th retail store in Florida on Nov. 18. “We are thrilled to open our 50th store in the nation as a green wave continues across the country with five more states voting to legalize medical or adult-use cannabis during the recent election,” said Kovler. (See GTBIF stock analysis on TipRanks)
Ahead of the results, Needham analyst Matt McGinley increased the stock’s price target to $23 from $21.50 and reiterated a Buy rating. In a note to investors, McGinley said, “GTI has been consistent in demonstrating its ability to execute on its plan and deliver profitable growth. We see GTI as one of the most compelling cannabis investments among MSOs [Multi-State Operators] and think that the strength of its operating footprint and measured pace of growth limit the risk of becoming overextended.”
GTBIF scores a Strong Buy analyst consensus based on 8 unanimous Buys. With shares up 108.3% year-to-date, the average price target of $23.26 indicates upside potential of 14.5% in the coming 12 months.
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