Trulieve Cannabis Tops Earnings Estimates; Stock Has Over 30% Upside Potential

Trulieve Cannabis Corp., a Canada-based seed-to-sale licensed medical cannabis company, reported a better-than-expected profit and revenue in the fourth quarter and exceeded guidance with another record quarter and third straight year of profitability.

The company, which engages in the cultivation, possession, sale, and distribution of medical cannabis, said its revenue in the ended December 31, 2020 rose 110% year-on-year to $168.4 million, beating the Wall Street consensus estimates of around $160 million. On a full-year basis, it reported revenues of $521.5 million, representing year-over-year growth of 106%.

Trulieve Cannabis posted net income of $3 million in the fourth quarter, or $0.38 per share, above the market expectations of $0.22 per share. The company forecasts 21021 revenues between $815 million to $850 million, and $355 million to $375 million in adjusted EBITDA.

The Canada-listed Trulieve Cannabis shares, which surged more than 160% in 2020, slumped over 5% to C$59.04 on Tuesday.

Analyst Comments

“Q4/20 results saw revenue and adj. EBITDA beat estimates. F2021 guidance was a firm beat on our expectations. Relative to consensus, revenue was in-line and adj. EBITDA was 4% below given a higher expected adj. EBITDA margin,” noted Graeme Kreindler, equity analyst at Eight Capital.

“Revenue of $168.4 MM grew 24% sequentially and was 6% ahead of our estimate and 4% ahead of consensus. Note that the quarter includes roughly a month and a half of contribution from the PurePenn and Solevo Wellness acquisitions, which closed on November 12, 2020. This was the tenth consecutive quarter that TRUL has beat consensus expectations for revenue. Adj. gross margin of 71% was in-line with our estimate and slightly below consensus at 73%. Adj. EBITDA of $78 MM was a beat on our estimate of $75 MM and consensus of $77 MM. This was the ninth consecutive quarter that TRUL has beat consensus expectations for adj. EBITDA.”

Trulieve Cannabis Stock Price Forecast

Six analysts who offered stock ratings for Trulieve Cannabis in the last three months forecast the average price in 12 months of C$75.83 with a high forecast of C$106.99 and a low forecast of C$52.00.

The average price target represents a 28.93% increase from the last price of C$58.81. All of those six analysts rated “Buy”, according to Tipranks.

Eight Capital gave a target price of C$95.50 and gave a “Buy” rating on the cannabis company’s stock.

“Our target price is based on 24x 2022E EBITDA of $392 MM. TRUL currently trades at 15.9x F2022E EBITDA vs. peers at 17.6x. The stock is +6% over the past month vs. peers at -7%,” Eight Capital’s Kreindler added.

Several other analysts have also updated their stock outlook. ATB Capital Markets raised the target price to C$78 from C$73. BTIG initiated with a buy rating and C$102 target price. Alliance Global Partners lifted the price target to C$66 from C$50. Canaccord Genuity upped the target price to C$75 from C$60.

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