Jushi is trading at a discount, according to Beacon


Beacon Securities analyst Russell Stanley holds on Jushi Holdings (Jushi Holdings Stock Quote, Chart, News, Analysts, Financials CSE: JUSH), maintaining a “Buy” rating and target price of C $ 12.00 / share for a potential return of 149% in a client update Thursday.

Founded in 2007 and headquartered in Boca Raton, Florida, Jushi Holdings is a vertically integrated multi-state cannabis company targeting assets in high growth potential limited license markets that have either legalized adult use or a clear path to do so. Jushi currently operates in its main markets of Illinois, Pennsylvania and Virginia, with additional holdings in California, Nevada, Ohio and Massachusetts.

Stanley’s latest analysis of Jushi comes after the company announced it had signed a $ 100 million senior secured credit facility with Sunstream, a joint venture sponsored by Sundial Growers, with an additional $ 25 million available. subject to certain conditions being met. (All figures are in US dollars, unless otherwise noted.)

“We view development positively because it offers valuable balance sheet flexibility,” noted Stanley.

Under the agreement, Jushi Holdings can draw down over an 18-month period, with loans issued under the facility paying 9.5% per annum and maturing five years after closing, the first two years. loans consisting only of interest.

According to Stanley, the company expects an initial drawdown of $ 40 million to cover the cash component of the recently closed $ 91 million acquisition of Nature’s Remedy of Massachusetts, with the remainder available to support further expansion efforts. .

“Management has indicated that it is reviewing opportunities in existing markets (Illinois, Ohio and California) as well as potential new markets such as New Jersey and Maryland,” said Stanley.

The company recently announced a change in its management team, having appointed Ed Kremer as the new CFO of Jushi after recently serving as COO and Restructuring of Le Tote and Lord & Taylor. , and bringing over 20 years of financial leadership experience in a number of industries including technology, fashion, manufacturing, wholesale distribution, licensing and retail.

“I am delighted to welcome Mr. Kremer to our management team,” said Jim Cacioppo, CEO, President and Founder of Jushi in the company’s October 18 press release. “As we continue to position Jushi for the future, his passion for the cannabis industry, strong leadership and extensive experience in driving financial and operational improvements should have an immediate positive impact on our business. I am confident Ed will be a great addition to our team as we continue to grow organically and strategically target inorganic opportunities. “

Stanley presents positive financial projections for Jushi, with projected revenue of $ 231 million for 2021 rising to $ 418 million forecast in 2022 for a potential 81% increase year-over-year, followed by another projected jump to $ 598 million in 2023, marking a potential increase of 43.1% year over year.

Adjusted EBITDA projections show an even steeper upward trajectory, with Stanley forecasting $ 32 million and a 13.9% margin in 2021 before an expected peak to $ 116 million and a 27.8% jump in 2022, followed by another increase to $ 213 million and Margin of 35.6% in 2023.

From a valuation perspective, Stanley’s projections also show a healthy business as multiple EV / Revenue projects at 5.1x for 2021 before dropping to 2.8x projected in 2022, then to 2x projected in 2023. EV / EBITDA projections follow a similar trend. way, with Stanley projecting a multiple of 36.8x in 2021 before dropping to 10x expected in 2022 and 5.5x in 2023.

Stanley notes that the company is currently trading at a rate of 5.5 times the 2023 Adjusted EBITDA forecast, which is a reduction of 35 from the 8.4 times rate reported by its peer group; Stanley points to the upcoming third quarter financial results in November as a possible catalyst, along with other updates regarding mergers and acquisitions, as well as builds.

In addition, Stanley notes that the company is already providing investors with high revenue leverage in Illinois and Pennsylvania with further market expansion on the horizon through additional licenses, placing the company in a privileged position to be a major player in Virginia as she heads for a potential opening. its commercial cannabis market for adults in January 2024, with the possibility of moving this date forward.

“In combination with positions in MA, CA and NV, JUSH can provide investors with the highest leverage in adult markets in the United States,” said Stanley.

Overall, Jushi Holdings’ share price is down 37.6% for the year to date, peaking at $ 11.00 / share on February 4 before falling to its current low of $ 4.78 / share.

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