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MarketScreener Homepage  >  Equities  >  CANADIAN NATIONAL STOCK EXCHANGE  >  Curaleaf Holdings, Inc.    CURA   CA23126M1023

CURALEAF HOLDINGS, INC.

(CURA)
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Curaleaf Holdings, Inc. : Target to become one of the world’s leading cannabis company

07/10/2020 | 05:12am EST

An unorthodox pick among MarketScreener's selected opportunities, Curaleaf Holdings, formerly known as Lead Ventures Inc, is the sixth most valuable cannabis company in North America.

Albeit listed in Canada, the company operates essentially in the U.S. Of note are the peculiar backgrounds of its chairman — the Russian-American businessman Boris Jordan, a star investment banker known to advise oligarchs — and of its majority shareholder, Andrei Blokh, a former partner of Roman Abramovich.

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Established in 2010, the company's financial history remains opaque till 2016, as its first public equity raise dates from 2018. Two highlights however: the company is still losing money — with a cash-burn before acquisitions of about $170mil — and it will require more capital to fulfill management's vision of becoming "the world’s leading cannabis company".

Of course, a substantial market opportunity shines in the horizon. While the U.S. legal cannabis industry is projected to total $16bn in 2020, total cannabis demand is estimated to total $75B-$100B, including markets serviced by illicit actors. 37 states have already legalized medical cannabis, and 12 out of these 37 have allowed adult-use for recreative ends. 

So far most of Curaleaf's efforts have focused on securing cultivating and processing license — costs and requirements vary by states — as well as acquiring peers across the value chain, from distribution to manufacturing. Growth of consumption per capita as new product forms, such as edibles and vapes, lead to proliferation of uses; building up a comprehensive offering takes time and money.

Management believes that vertical integration will distinguish Curaleaf from peers in their race to scale. Channel ownership burdens the cost structure, but it undercuts the middlemen — a rewarding feature in what should remain a high-margin retail segment — and enables products to reach consumers faster. In frontier markets, speed drives control.

Last year, the takeover of Grassroots propped the store count up to 135 venues, while the buyout of Select earlier in 2020 expanded wholesale to more than a thousand stores. With 2.2 million square feet of cultivation capacity, 180,000 patients served and 30 processing facilities, Curaleaf sports an unparalleled cost-to-coast footprint and ranks as a serious contender.

Despite the onset of the COVID-19 pandemic — or perhaps because of it — and thanks to these acquisitions, Curaleaf succeeded at growing revenue by 29% and adjusted EBITDA by 45% sequentially in 1Q20. It has also captured sizeable market shares in key states such as New Jersey or Florida, for a 14% market share nationwide.

Regardless, analysts see the integration of Grassroots as well as the expansion of regulated markets and conversion of illicit markets as major catalysts going forward. With $155mil in pro forma revenue, Curaleaf should widen the gap with its two closest followers, GTI and Trulieve, each with approximately $100mil in revenue.

Valuation-wise, shares trade at bubble-like PE ratios — a la Tesla, Netflix, etc. — but surprisingly affordable EBITDA multiples related to enterprise value, notwithstanding the fact that Curaleaf represents an ideal acquisition candidate for heavyweights such as Aurora, Canopy or GW Pharmaceuticals.

Value investors will look elsewhere, of course, but growth enthusiasts and momentum players may be keenly interested in following the next move. At this point, the key risks are an investor retreat — for instance if the pot rush came to fade — and the federal Department of Justice taking a closer look at cannabis M&A transactions.

Curaleaf is a position in Marketscreener's US portfolio.


© MarketScreener.com 2020
All news about CURALEAF HOLDINGS, INC.
02/24CURALEAF  : Executives to Present at the Benzinga Cannabis Capital Conference
AQ
01/29CURALEAF  : First Curaleaf-Branded Retail Location Opens in Harrisburg, Pennsylv..
AQ
01/25VEXT Science Down Slightly As Receives Approval to Begin Recreational Cannabi..
MT
01/25CURALEAF  : Launches Adult-Use Operations in Arizona
AQ
01/22HARVEST HEALTH & RECREATION  : At New 52-Week Highs After Reporting First Recrea..
MT
01/12CURALEAF  : Announces Closing of Offering of Subordinate Voting Shares
AQ
01/12CURALEAF  : Announces Participation Details for Upcoming January 2021 Investor C..
AQ
01/07CURALEAF  : Announces Pricing of Offering of Subordinate Voting Shares
AQ
01/06CURALEAF  : Announces Proposed Offering of Subordinate Voting Shares
AQ
2020CURALEAF HOLDINGS BRIEF : Rose 1.9%, Nearer 52 Week Highsh Today; Then Says CEO ..
MT
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Key data
Capitalization (CAD)
12 787 624 978
Capitalization (USD)
10 076 136 615
Net sales (USD)
221 018 000
Free-Float
58,8%
Free-Float capitalization (CAD)
7 517 900 538
Free-Float capitalization (USD)
5 923 804 695
Avg. Exchange 20 sessions (USD)
16 732 757
Average Daily Capital Traded
0,13%
Income Statement Evolution
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Sell
Buy
Mean consensus BUY
Number of Analysts 15
Average target price 17,35 $
Last Close Price 14,76 $
Spread / Highest target 74,1%
Spread / Average Target 17,6%
Spread / Lowest Target -20,3%
Consensus revision (last 18 months)