Trulieve Cannabis Corp. is more bullish on prospects for a ballot referendum to approve adult-use cannabis in its home state of Florida which may be a potential spark for its stock.
The cannabis company said Wednesday it expects its first-quarter revenue to fall from the fourth-quarter level of $302 million after it warned of lower sequential revenue in the first quarter.
Wall Street analysts currently expect Trulieve to post revenue of about $297 million, according to estimates compiled by FactSet.
Trulieve’s
TCNNF,
stock fell 4% on Wednesday to $6.27 a share, as it approached its record low close of $6.00 on March 18, 2020. Wednesday’s close was its lowest since Feb. 27, when it closed at $6.10 a share.
Jefferies analyst Pablo Zuanic reiterated an overweight rating on Trulieve stock and cut his 12-month price target to $37 from $41.
“With $219 million in cash, below average cost of debt, and unencumbered assets, we believe Trulieve is well-placed to benefit from M&A opportunities in the year ahead (assets, spin-offs, as well as companies),” Zuanic said. “The latter combined with ongoing good progress on putting rec legalization in the Florida Nov’24 ballot, bode well for the stock, in our opinion.”
Zuanic said polls indicate support for Florida adult-use cannabis, which he said amounts to “arguably the main catalyst for the stock.”
Trulieve has been spending to support the Smart and Safe Florida campaign to put adult-use cannabis on the ballot in the Sunshine State potentially by 2024.
The campaign has validated 420,000 of the 890,000 signatures it needs to get on the ballot, and has gathered more than one million raw signatures.
Trulieve CEO Kim Rivers told MarketWatch the state’s adult-use market could tip the scales at more than $6 billion.
Meanwhile, however, medical cannabis customers have been going to dispensaries more often but spending less per month as the recession kicks in, she said.
“There’s been slight pressure on consumer behavior on our top line,” Rivers said.
Overall, the company continues to focus on cash generation and managing costs, as it brings on a new 750,000 square foot indoor cultivation facility in Florida.
“We’re laser focused on optimizing cash generation and preservation,” Rivers said.
Trulieve Cannabis reported a fourth-quarter net loss of $77 million, or 40 cents a share, in the fourth quarter, wider than the loss of $72 million, or 48 cents a share, posted in the year-earlier period.
Excluding one-time items, its adjusted loss per share came to 18 cents, wider than the analyst estimate for a loss of 8 cents a share.
Rivers highlighted the company’s full-year 2022 revenue figure of $1.24 billion, up 32% from 2021 and a record, after the company grew organically as well as through acquisitions.
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Revenue fell 1% to $302 million from $305 million, just below the $307 million FactSet consensus.
Tallahassee, Fla.-based Trulieve reduced inventory by $4 million compared with a build of $32 million in the third quarter.
The stock has fallen 65% in the last 12 months, while the AdvisorShares Pure US Cannabis ETF MSOS, -3.14% has fallen 62% and the S&P 500 SPX, 0.18% has fallen 4.4%.
Ciara Linnane contributed to this story.
