Analyst Takeaways From Call With Trulieve CEO

Last week, Cantor Fitzgerald analyst Pablo Zuanic hosted a conference call with Kim Rivers, CEO of U.S. cannabis multi-state operator Trulieve Cannabis Corp TCNNF. Zuanic summed up the discussion and listed three primary takeaways for investors.

First, Rivers confirmed that sales accelerated in the first quarter of 2020 compared to the fourth quarter of 2019. Zuanic said that acceleration likely means Trulieve’s first-quarter numbers will have upside relative to consensus expectations.

Second, after 40% month-after-month flower volume growth in March, Trulieve’s April sales were higher, which Zuanic says may be unique among Trulieve’s peers. Average order size was up from $120 in March to $127 in April, while orders per month were down just 1.5%.

Finally, Rivers said the Florida market should benefit from the launch of edibles in 2020 and a potential wholesale market in 2021. Zuanic said the vast majority of Trulieve’s sales in 2020 will come from Florida, with only up to about $15 million coming from California and Connecticut combined.

“All in all, we think the use of Telemedicine (for consumers’ med licenses) and expanded delivery options (curbside pickup, delivery, online ordering) should bode well for the market (bringing in new customers to the program in a state with a population of 21mn people where, for now, 1.5% participate in the medical program),” Zuanic said of Florida.

Gaining Share

Data from the Office Of Medical Marijuana Use suggests Trulieve has gained significant market share during the coronavirus (COVID-19) pandemic. Roughly 60% of current sales are curbside pickup, and the remaining 40% are delivery.

Rivers is also the largest Trulieve shareholder, and company founders currently hold about 61% of the stock ahead of major lock-up expiration dates in May and July. Rivers said she has no plans to sell any stock.

Cantor Fitzgerald has an Overweight rating and $39 price target for Trulieve.

Benzinga’s Take

The long-term outlook for the cannabis business remains bright, and there have been numerous reports that the stay-at-home environment has actually ramped up cannabis demand.

However, given the difficult credit environment at the moment and the challenged balance sheets of many cannabis companies, investors can expect significant outperformance from the top-performing cannabis stocks relative to the bottom of the barrel.

Do you agree with this take? Email feedback@benzinga.com with your thoughts.

Related Links:

How Legalizing Marijuana Could Help Kick-Start The US Economy

Cannabis Stock Rally Puts Short Sellers In The Red For 2020

Photo courtesy of Trulieve

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