One industry that's been beaten to a pulp is the vertically integrated dispensary space in the United States. It requires significant amounts of capital to construct greenhouses, operate processing facilities, and renovate or construct dispensaries for the sale of cannabis. But none of this has been an issue for Green Thumb Industries (GTBIF).
During the fourth quarter, Green Thumb's sales grew by 237% to $20.8 million, including 21% sales growth from the sequential quarter. More specifically, the company wound up opening seven Rise retail stores during the fourth quarter, bringing its total number of locations to 14. Furthermore, more than 5 new store openings are planned for the second quarter 2019 including Rise stores across Ohio, Pennsylvania, and Florida. Overall, Green Thumb plans to open 15 to 20 new stores in 2019.
Seaport analyst Brett Hundley believes Green Thumb stock could soar about 25% over the next 12 months, as he reiterates a Buy rating rating and raising his price target for the stock to $18.00 (from $16.00). (To watch Hundley's track record, click here)
Hundley commented, "One of the things that we have liked about GTBIF from day one is its focus on building CPG brands across the US dispensary space. This is where we ultimately expect margin strength to reside, despite most of the supply chain profitability being located within the retail segment, at present. Moreover, we expect the company's development of distinct wholesale and retail businesses to offer future optionality alongside relative protection from regulatory risk, depending on how the federal US government's views evolve."
"If there is any knock on Green Thumb, it is that the company's path to brand building in mainly limited license medical states may have afforded it more ease relative to building brands in open states like California, for instance. This argument may hold some weight, but we would also hurry on to mention that competitors in limited license states tend to many times be better capitalized and managed, relative to open states. GTBIF has a wealth of executive talent in place, and we expect recent acquisitions like Beboe to aid in future wholesale expansion efforts, to include what we expect will be a high-end differentiated CBD offering for omni-channel outlets, ahead," the analyst continued.
All in all, with the U.S. marijuana industry having a considerably larger peak sales potential than Canada (if legal), there's a lot of excitement surrounding Green Thumb's rapidly expanding branded retail operations.
Wall Street’s confidence on the cannabis stock speaks for itself; GTBIF has received 5 'buy' ratings in the last six months, with no 'sell' or 'hold' ratings. Meanwhile, the $20.55 (C$27.40) consensus price target suggests a potential upside of nearly 40% from the current share price.
To read more on the nitty gritty of what’s going on in the rising cannabis industry, click here.