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Analysts Cut Curaleaf’s Target Price after Its Q4 Earnings


Mar. 27 2020, Published 12:38 p.m. ET

On March 24, Curaleaf Holdings (OTCMKTS:CURLF) reported its fourth-quarter earnings. For the quarter, the company beat analysts’ revenue and EBITDA expectations. However, the company revoked its fiscal 2020 guidance due to disruption from the coronavirus outbreak. Management stated that the company closed its stores in Massachusetts. Also, less in tourism could lower cannabis sales in Nevada. These factors could have caused Curaleaf stock to fall. As of March 26, Curaleaf was trading at 5.44 Canadian dollars, which represents a fall of 2.5% since it reported its fourth-quarter earnings.

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Analysts’ target price for Curaleaf

Since Curaleaf reported its fourth-quarter earnings, Alliance Global Partners and Canaccord Genuity have lowered their target prices, as reported by MarketWatch. Aaron Grey of Alliance Global Partners cut its target price from 14 Canadian dollars to 12 Canadian dollars. Matt Bottomley of Canaccord Genuity reduced its target price from 16 Canadian dollars to 15 Canadian dollars. Meanwhile, Stifel and Cowen kept their target prices unchanged. As of Thursday, analysts’ consensus target price was 4.56 Canadian dollars—a decline from 15.97 Canadian dollars on February 26. Meanwhile, the new target price represents a 12-month return potential of 167.7% from the closing price on Thursday.

Analysts’ opinions

Alliance Global wrote in its research that the decline in Massachusetts’s cannabis sales could hurt Curaleaf’s revenue the most. Grey said that although the company offers different options, the uncertainty will likely remain. However, he thinks that the cannabis industry is well-positioned compared to others industries during the coronavirus outbreak. Grey said that Curaleaf’s balance sheet is strong. Most of the company’s revenue comes from markets that have termed cannabis as “essential.”

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Bottomley stated that the shutdown measures created headwinds for the cannabis sector. He added that Curaleaf recently closed $300 million senior secured debt. Even taking out the cash required to complete its already announced acquisitions, the company has $260 million of unallocated cash. So, he added that Curaleaf’s balance sheet looks strong. Overall, the company is well-positioned to expand its operations in the US.

As reported by MarketWatch, Robert Fagan of Stifel GMP added that the lockdown amid the coronavirus outbreak led to a 30% boost in cannabis sales. He said that the revenue from Select brand, which Curaleaf recently acquired, could rebound in the second quarter. Fagan thinks that the integration of Select products to Curaleaf’s platform could boost its sales. Also, the brand will launch new products, like gummies, which could drive its sales.

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Analysts’ ratings for Curaleaf

There isn’t a rating change for Curaleaf after its fourth-quarter earnings. As of Thursday, 11 analysts covered Curaleaf. Among the analysts, ten recommend a “buy,” while one recommends a “hold.” None of the analysts recommend a “sell.” However, more analysts have started covering the stock since last month. On February 26, only nine analysts covered the stock. Let’s look at analysts’ ratings for Curaleaf’s peers.

  • Wall Street is bullish on Cresco Labs (OTCMKTS:CRLBF). All of the 13 analysts that follow the company recommend a “buy.”
  • For OrganiGram Holdings (NASDAQ:OGI), 12 of the 16 analysts recommend a “buy,” while four recommend a “hold.” Recently, Bank of America upgraded the stock. Read Why Did Bank of America Upgrade Aphria and OrganiGram? to learn more.
  • Analysts favor a “hold “rating for MedMen Enterprises (OTCMKTS:MMNFF). Among the seven analysts, five recommend a “hold,” while two recommend a “sell.”

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