Trulieve Cannabis Posts Mixed 3Q Results; Needham Stays Bullish

Trulieve Cannabis reported revenue of $136.3 million for the third quarter, which reflected 13% quarter-over-quarter growth and a 93% year-over-year rise. It exceeded analysts’ estimate of $132 million.

The medical cannabis company attributed its revenue growth to higher retail sales due to increased product offerings, higher patient count and the addition of nine new dispensaries in the quarter.

However, Trulieve’s (TCNNF) 3Q GAAP EPS of $0.15 lagged analysts’ forecast of $0.21. The bottom line was impacted by a decrease in the fair value of biological assets, higher sales and marketing expenses as well as general and administrative expenses to support additional dispensaries and an increase in personnel-related costs.

Trulieve’s CEO Kim Rivers stated, “Following an outstanding quarter, industry leading profitability, and our recent entry into two additional states in the northeast, Trulieve has never been better positioned for the future.  Our third quarter was especially memorable because we introduced the long-awaited edibles product lines to our offerings and announced our acquisitions in Pennsylvania, where we see tremendous growth potential.”

“Just last week the Pennsylvania acquisitions closed, and we were awarded a processor license in West Virginia. We also recently achieved our 2020 goal of opening 68 stores nationwide and expect our strong growth to continue,” added CEO Rivers. (See TCNNF stock analysis on TipRanks)

Following the results, Needham analyst Matt McGinley reiterated a Buy rating for Trulieve with a price target of $36.25. McGinley commented, “Slight QoQ decel in topline growth, but no indication of anything other than a business building scale and gaining momentum into ’21. Despite the stock at +128% YTD, it is only trading at 9x our ’21 EV/EBITDA. This multiple is low compared to MSO [multi state operators] peers and non-cannabis stocks with similar growth profiles, and most of the equity appreciation has been driven by EBITDA increases rather than multiple expansion. As such, we believe the current share price offers a compelling entry point.”  

The Street is very bullish on Trulieve, and its Strong Buy analyst consensus is based on 7 unanimous Buys. The average price target of $35.41 implies an upside potential of 30.8% over the coming year. Shares have risen a whopping 129% year-to-date.

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