Cantor Upgrades Green Thumb Industries On Fundamentals, Relative Valuation

Shares of Green Thumb Industries Inc. GTBIF Friday closed higher by 15%, after the company reported stronger-than-expected results for the first quarter.

Although Green Thumb’s performance in the second quarter could be flat due to COVID-related challenges, the positives for the company include relative valuation, fundamental outlook versus its peers and favorable regulatory catalysts for multistate operators, according to Cantor Fitzgerald.

The Green Thumb Analyst

Pablo Zuanic upgraded Green Thumb from Neutral to Overweight, while raising the price target from $9.60 to $15.

The Green Thumb Thesis

While Green Thumb’s second-quarter results may not reflect the positive impact of Illinois legalizing cannabis on January 1, the company has “a lot going for it,” Zuanic said in the upgrade note.

The company is well-capitalized and has its 2020 production expansion plans funded. This suggests possible margin expansion to reach best-in-class levels among multistate operators, the analyst mentioned.

While Green Thumb has a presence in states with good prospects and enjoys depth in these markets, it has a presence in very few problematic states, Zuanic noted. He added that the company “does not have the inherent risk of pending acquisitions and/or of integrating them.”

Rivals Cresco Labs CRLBF and Curaleaf Holdings CURLF have higher risk due to exposure to California and large acquisitions, while their stocks are trading at higher valuations than Green Thumb, the analyst said.

GTBIF Price Action

Shares of Green Thumb traded around $9.65 on Monday afternoon.