A team of analysts at Cowen are said to have joined a growing contingent who are bullish on select U.S. pot companies known as multistate operators, or MSOs.
Even though many expect the U.S. marijuana market to be the biggest in the world, growers based here like Green Thumb Industries, Cresco Labs, and Curaleaf Holdings trade at a discount to their Canadian peers.
“With the U.S. operators penalized from a tax perspective, handcuffed in terms of true scientific research and restricted in terms of geographic optionality outside of the U.S., the operating paradigm is quite nuanced, relative to Canadian cannabis,” they wrote, Barron’s reported.
Green Thumb Industries (GTBIF) won an Outperform rating with a price target of $18.50. “GTI is our highest conviction Outperform among all the U.S. MSOs now under our coverage,” the analysts wrote. “While several of GTI’s peers have been keenly focused on rapidly expanding their retail footprints to build dominant retail brands, GTI has taken a slower, but we think more thoughtful approach, by balancing revenue mix between wholesale and retail,” they said.
Cresco Labs (CRLBF) also achieved an Outperform rating, with a $14 price target. “[Cresco] is more focused on establishing a robust wholesale business by curating a portfolio of brands that can fully penetrate a market,” they wrote.
Curaleaf Holdings (CURLF), with a price target of $10.50, was the third company rated at Outperform. “Curaleaf has positioned itself as one of the largest MSOs in the market, leading our coverage universe in terms of organic revenue generation, as well as pro forma revenues,” they wrote.
MedMen (MMNFF), on the other hand, received an Underperform rating, with a $1.50 price target. The company has focused on retail sales. “While in isolation, this is a durable business model, in the nascent cannabis industry, we favor higher margin mix from wholesale,” the analysts said.
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