New Cannabis Store Opens before Green Thumb’s Q1 Earnings

Green Thumb Industries (OTCMKTS:GTBIF) will likely report its results for the first quarter of fiscal 2020 on May 14 after the market closes. Amid the COVID-19 pandemic, Green Thumb announced that it opened a new cannabis store in Las Vegas. The company has been performing well. Green Thumb has a solid footprint in the recreational cannabis market in the US. Let’s take a look at what analysts expect from the company’s first-quarter results.

Green Thumb opened a new cannabis store

Green Thumb opened an Essence South Rainbow store on May 13. The store is the fourth Essence store in Las Vegas. The company announced the store opening amid the COVID-19 pandemic. Green Thumb took the necessary measures to deal with the current demand. The company’s founder and CEO, Ben Kovler, said, “We have expanded our service model to include curbside pickup and we have bolstered our delivery infrastructure in Nevada so that we can continue to serve the community with much-needed access to quality cannabis. Our team has continued to show incredible resolve and commitment through the ongoing COVID-19 crisis as demonstrated by this retail opening, our third since the crisis began.”

While many other sectors and industries have seen a downfall, Green Thumb has been expanding. The new store is the 44th store in the US. Currently, Green Thumb has 13 manufacturing facilities and holds licenses for 96 retail locations. The company has operations across 12 US markets. Green Thumb also has licenses to open seven more retail stores in Nevada. When Illinois legalized marijuana on January 1, the company opened Rise Joliet—its first recreational marijuana store in the state. Illinois saw a huge surge in demand after legalization and so did Green Thumb. Now, with marijuana being an essential item amid the pandemic, the demand for cannabis keeps rising. Most of the US cannabis companies have performed well in their recent quarters compared to their cannabis peers.

What analysts expect from Green Thumb’s Q1 results

Analysts expect Green Thumb to report 230% YoY (year-over-year) growth in its revenue to $92.1 million compared to $27.9 million in the first quarter of 2019. Sequentially, the revenue could also increase from $75.8 million in the fourth quarter of fiscal 2019. Analysts expect the revenue to rise more to $97.5 million in the second quarter, $116.0 million in the third quarter, and $133.3 million in the fourth quarter. For fiscal 2020, the revenue could be around $432.62 million.

Analysts also expect the company to report a positive EBITDA of $16.8 million in the first quarter compared to a loss of $6.2 million in the first quarter of fiscal 2019. Sequentially, the EBITDA could also increase from $14.8 million in the fourth quarter of fiscal 2019. The numbers show that Green Thumb’s growth strategies have been working. The company has been strengthening its footprint in the US. Once the pandemic ends, launching Cannabis 2.0 products could lead to more growth. Analysts think that the EBITDA could rise in upcoming quarters. Green Thumb could report a positive EBITDA of $18.2 million in the second quarter, $28.4 million in the third quarter, and $37 million in the fourth quarter, respectively.

Analysts’ target price and recommendations

In January, I discussed how Beacon Securities analyst Russell Stanley is bullish on the stock due to its expansion strategies. Currently, 13 analysts cover Green Thumb stock. Among the analysts, 11 recommend a “buy,” while two recommend a “strong-buy.” Analysts have given the stock a target price of 21.97 Canadian dollars for the next 12 months. The target price represents a 112% upside potential for the stock as of Tuesday’s closing price. The stock closed at 7.35 Canadian dollars on May 12.

Recently, other US cannabis companies also reported strong results. Cresco Labs (OTCMKTS:CRLBF), Curaleaf, and Charlotte Web Holdings’ earnings results were good in the recent quarter. Charlotte’s Web will likely report its first-quarter earnings this month. Analysts seem bullish on the stock again. GW Pharmaceuticals (NASDAQ:GWPH) reported an impressive first-quarter performance. Cronos Group (NASDAQ:CRON) saw a surge in its sales in the first quarter. However, we don’t know how Aurora Cannabis’ (NYSE:ACB) earnings will turn out in the third quarter. The company executed its reverse stock split on Monday.

Today at 9:38 AM ET, Green Thumb stock and Curaleaf stock are trading 0.15% and 1.3% higher. Meanwhile, Cresco Labs and Charlotte Web Holdings stock are trading 5.0% and 0.60% lower. Cronos Group and Aurora Cannabis are trading 2.2% and 4.9% lower today.

To learn more about the sector, read Marijuana Investors: Forecast in May amid COVID-19.