Analysts at Stifel GMP have published a research update on Curaleaf Holdings, Inc, after the US multi-state operator (MSO) announced that it will close its California, Colorado, and Oregon businesses, consolidate its Massachusetts facilities, and implement a 10% payroll reduction while also initiating robust 2023 free cash flow (FCF) guidance of $125 million, above expectations and representing a yield of nearly 5%.
“Our positive stance on CURA is based on: 1) CURA being the largest cannabis company in the world and the only US company with international optionality; 2) an M&A track record of completing every transaction announced and attractive deal flow; and 3) best-in-class access to capital with the largest equity and debt financings in the history of the US industry,” the analysts wrote.
The Stifel analysts noted that Curaleaf’s California, Colorado, and Oregon operations represent less than 4% of the company’s existing 2022 estimated sales forecast, while stating that its latest move “is a substantial pivot from the series of acquisitions over the past 3 years to build a meaningful presence in the country's most mature markets”.
They added that Curaleaf will likely provide further clarity on its FCF guidance when it releases its fourth quarter 2022 earnings results, believing “its actions better position the company to operate amid the challenging environment and provide flexibility to capitalize on distressed opportunities with shares potentially re-rating higher upon successful execution.”
Stifel has a C$8.50 per share target price on Curaleaf stock.
Contact Sean at sean@proactiveinvestors.com