Trulieve Cannabis Beats Profit Estimates; Share has an upside potential of over 30%

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Trulieve Cannabis Corp., a Canada-based licensed medical cannabis company that offers seeds for sale, posted better-than-expected earnings and sales for the fourth quarter, beating forecasts with another record quarter and third straight year of profitability.

The company, which cultivates, owns, sells, and distributes medical cannabis, announced that its revenue as of December 31, 2020 was up 110% year over year to $ 168.4 million, in line with consensus estimates from the Wall Street has surpassed it by around USD 160 million. The company had annual sales of $ 521.5 million, an increase of 106% over the previous year.

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

Canada-listed Trulieve Cannabis shares, which rose more than 160% in 2020, fell over 5% to $ 59.04 on Tuesday.

Analyst Comments

“Fourth quarter 20 results showed sales and adj. EBITDA exceeded estimates. The forecast for F2021 has significantly exceeded our expectations. In relation to consensus, revenue was inline and adj. The EBITDA was 4% below the value with a higher expected adj. EBITDA margin, ”said Graeme Kreindler, equity analyst at Eight Capital.

“Revenue of $ 168.4 million increased 24% sequentially, 6% above our estimate and 4% above consensus. Note that the quarter includes approximately a month and a half of contribution from the PurePenn and Solevo Wellness acquisitions that closed on November 12, 2020. This was the tenth consecutive quarter that TRUL exceeded consensus revenue expectations. Adj. The gross margin of 71% was in line with our estimate and at 73% was slightly below the consensus. Adj. EBITDA of $ 78 million exceeded our estimate of $ 75 million and consensus of $ 77 million. This was the ninth straight quarter that TRUL exceeded consensus expectations for adj. EBITDA. “

Trulieve cannabis stock price forecast

Six analysts who have offered stock valuations for Trulieve Cannabis in the past three months forecast an average price of $ 75.83 in 12 months with a high forecast of $ 106.99 and a low forecast of $ 52.00.

The average target price corresponds to an increase of 28.93% over the last price of 58.81 CAD. According to Tipranks, all of these six analysts rated them “Buy”.

Eight Capital issued a target price of $ 95.50 and a buy rating for the cannabis company’s stock.

“Our price target is based on an EBITDA of USD 392 million around the clock 2022E. TRUL is currently trading at 15.9x F2022E EBITDA versus peers at 17.6x. The stock was + 6% last month versus -7% for comparable stocks, ”added Eight Capital’s Kreindler.

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

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