Planet 13 Holdings is seen returning to top-line growth and a more sustainable earnings before interest, taxes, depreciation, and amortization (EBITDA) run rate in the second half of this year by analysts at Canaccord Genuity (TSX:CF, LSE:CF).
On the release of its first quarter results, the analysts noted that Planet 13 delivered revenues in line with expectations during a quarter challenged by pricing pressures.
“EBITDA, though modest, beat expectations as management worked to contain costs,” they wrote.
The analysts pointed out that management’s 2023 outlook was weighted toward the back end of the year.
“PLTH expects 2023 revenue to be flat in the first half of the year with growth toward the back end of the year, driven by the new assets that are coming online in Illinois and Florida,” they wrote.
“PLTH doesn’t anticipate full-year gross margin reaching north of 50% due to the diluted impact from the wholesale operations in both California and Nevada.
“The company continues to target gross margin of 50% or higher for its retail operations and expects gains from vertical integration to offset some pricing pressures at retail.”
As a result, Canaccord’s analysts reiterated their ‘Hold’ rating on the stock with a price target of C$1.40. Planet 13 shares are currently trading at C$0.84.
“Our C$1.40 price target represents an EV/EBITDA multiple of 24.3x on 2023 estimates,” the analysts wrote.
Contact the author at emily.jarvie@proactiveinvestors.com
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