Analysts at Canaccord Genuity (TSX:CF, LSE:CF) have repeated their US$1 price target and ‘Hold’ rating for Jushi Holdings after the multi-state cannabis operator reported its first quarter financial results.
Jushi’s shares are currently trading at US$0.47.
In a note to clients dated May 12, the analysts highlighted that 1Q was a strong quarter for Jushi in terms of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).
“While revenue [of $69.9 million] was below our estimate of $73 million and $74.2 million consensus, adjusted EBITDA [of $7.6 million] came above our estimate of $2.2 million and above $4.3 million consensus,” the analysts wrote.
The analysts noted the company’s increase in gross margin to 43% from 31% in the year-ago quarter was driven by operating efficiencies at the grower-processor facilities in Massachusetts, Nevada, and Virginia, partially offset by pricing pressures in Illinois and Pennsylvania.
“Adjusted EBITDA was favorably impacted by higher sales and benefits from operational efficiencies,” they wrote.
The analysts reiterated their ‘Hold’ rating and price target noting Jushi’s focus on profitability aided by utilization ramp.
“We see several drivers of profitability improvement throughout the balance of 2023, including continuing benefits from workforce transformation within JUSHF’s retail store network and greater utilization rates within grower processor assets flowing through the model late 2Q and into 3Q onward,” they wrote.
“Challenges on the demand and pricing fronts look to linger in southern Illinois and Pennsylvania following the launch of Missouri’s legal program and competition from illicit sales, respectively, while Virginia continues to offer longer-term promise.”
They also noted the company’s focus on operating cash flow for 2023.
“While JUSHF hasn’t provided guidance for full-year 2023, looking ahead the company anticipates generating positive operating cash flow for debt pay-downs by 4Q 2023,” they concluded.
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