Cresco Labs Gets Another ‘Buy’ Rating

Yesterday, Eight Capital initiated coverage on Cresco Labs (CRLBF) with a “buy” rating.

Mohit Oberoi, CFA - Author

Dec. 4 2020, Updated 10:53 a.m. ET


Cresco Labs

Yesterday, Eight Capital initiated coverage on Cresco Labs (CRLBF) with a “buy” rating and put a price target of 20 Canadian dollars on the stock. The stock has received a “buy” or equivalent rating from all four analysts polled by Thomson Reuters, and its target price of 20.25 Canadian dollars represents a potential upside of 44.6% over yesterday’s closing prices. Cresco Labs lost 13.1% last month but is still up 51% year-to-date.

Cresco Labs has presences in both the adult use and medical cannabis markets. It has its own production and distribution facilities and distributes its products through other dispensaries also. Cresco Labs’ product portfolio consists of flowers, extracts, pre-rolls, and vapes.

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First-quarter earnings

Cresco Labs released its first-quarter earnings on May 29, and its top line fell slightly short of estimates. It reported revenues of $21.1 million in the first quarter, a YoY rise of 311%. The company’s revenues had risen 411% YoY in the fourth quarter also. Most cannabis players reported strong yearly growth in their first-quarter revenues. However, the growth was accompanied by higher investments and expenses, which led to wider losses.

Cresco Labs’ adjusted EBITDA fell to $0.8 million in Q1 2019 from $1.0 million in Q1 2018. It reported a net loss of $7.6 million in the first quarter as compared to a net income of $0.6 million in the first quarter of 2018. Harvest Health & Recreation, which reported its first-quarter earnings on May 31, also reported a big loss in the quarter and its net losses even surpassed its quarterly revenues.


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