Curaleaf Holdings Inc. (OTCQX:CURLF) reported healthy results for the second quarter and announced upbeat guidance for the third quarter, according to Cantor Fitzgerald.

The Curaleaf Analyst: Pablo Zuanic upgraded the rating for Curaleaf Holdings from Neutral to Overweight, while raising the price target from $10 to $18.

The Curaleaf Thesis: The company’s third-quarter sales guidance is 15% higher than Cantor’s estimate and implied 20-25% upside to fourth-quarter point, Zuanic said in the upgrade note.

Curaleaf doubled its capacity in key states, partly fueled by continued investment, the acquisition of Grassroots and the ongoing national rollout of the Select brand, the analyst mentioned.

He added that the company is accelerating its capacity expansion at a time when its peers are scaling down. Zuanic further noted that Curaleaf has a presence in 23 states and seeks to build “nationally recognized brands.”

However, the analyst expects the stock’s outperformance will be driven by having leadership in states like Massachusetts and Illinois, which are fast growing restricted recreational markets. He added that several of the states, like Arizona, New York, New Jersey and Connecticut, could go recreational.

Moreover, the company’s plans in Florida “offer further optionality upside,” Zuanic wrote.

CURLF Price Action: Shares of Curaleaf Holdings were trading around $9.20 at the time of publication.

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