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What Can You Expect from IIPR’s Q4 Earnings?

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Innovative Industrial Properties (NYSE:IIPR) will report its results for the fourth quarter of 2019 today after the market closes today. The company is a REIT that focuses on providing capital to the medical cannabis industry. For the quarter, analysts expect the company to post revenue and EPS growth. Let’s look at analysts’ expectations in detail.

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IIPR’s revenue will likely rise

For the fourth quarter, analysts expect IIPR to report revenue of $14.4 million. The amount represents sequential growth of 24.4% from $11.56 million in the third quarter. Acquiring new properties could drive the company’s revenue. As of December 23, 2019, the company owned 46 properties across 14 states. Together, the properties formed approximately 3.1 million square feet of rental space, which includes 913,000 square feet under development. The company has invested approximately $489.3 million to acquire these properties. IIPR has committed an additional $144.9 million to reimburse tenants for developing the properties.

IIPR’s fourth-quarter EPS

Analysts expect IIPR to report an adjusted EPS of $0.57. The estimate represents 3.6% growth from $0.55 in the third quarter and 137.5% growth from $0.24 in the same quarter of the previous year. Compared to the third quarter, higher revenue and an increased EBITDA margin could drive the company’s adjusted EPS. However, an increase in the number of shares outstanding could offset some of the EPS gains. For the quarter, analysts expect IIPR’s EBITDA margin to improve from 78.3% in the third quarter to 84.6%. The decline in SG&A expenses could drive the company’s EBITDA margin.

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Analysts’ ratings

Analysts are bullish on IIPR ahead of its fourth-quarter earnings. As of Tuesday, two of the three analysts that follow the company recommend a “strong-buy” rating. Meanwhile, one analyst recommends a “hold” rating. None of the analysts recommend a “sell” rating. Overall, analysts’ average target price is $140.50, which implies a 12-month return potential of 45.5%.

Stock performance

As of Tuesday, IIPR is trading at $96.54, which represents 33% growth since its third-quarter earnings on November 6. The impressive third-quarter earnings and acquiring new properties led to a rise in the company’s stock price. Last year, when the cannabis sector was going through a tough period, IIPR delivered impressive returns of 67.2%. This year, the company has continued its upward momentum. Notably, IIPR has returned 27.2% YTD. Meanwhile, the company has outperformed its peers in 2020. So far, OrganiGram Holdings (NASDAQ:OGI), Curaleaf Holdings (OTCMKTS:CURLF), and Green Growth Brands (OTCMKTS:GGBXF) have fallen by 2.0%, 14.1%, and 63.8%, respectively. Green Growth Brands reported its second-quarter earnings on Monday. To learn more, read Green Growth Brands Reported Mixed Q2 Performance.

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