Curaleaf Inc. shares surrendered recent gains on Tuesday after the U.S.-based cannabis company missed analyst expectations, reported a wider quarterly loss and said it expects 2021 revenue at the lower end of its estimated range.
Curaleaf
CURA,
CURLF,
said its third-quarter net loss for the three months ending Sept. 30 widened to $56.4 million, or 8 cents a share, from $9.34 million, or a penny a share, in the year ago period. Revenue rose 74% to $317.13 million, to set a record. Revenue also gained 2% over the prior quarter’s tally of $312.21 million. Third-quarter operating expenses increased to $142.75 million from $99.4 million, in the year-ago period.
Curaleaf fell short of the analyst forecast for break-even earnings and revenue of $331.3 million, according to a FactSet Survey.
Shares of Curaleaf fell 5%, giving back gains made on Monday amid optimism around M&A and potential moves on federal legalization of cannabis in Congress.
Looking ahead, Curaleaf executive chairman Boris Jordan said the company expects full-year revenue to come in at the lower end of its prior guidance of $1.2 billion to $1.3 billion.
“Strategic M&A remains a key pillar our growth plan,” he said, a day after the company announced plans to pay about $286 million to acquire privately held Tryke Companies to boost its presence in the Southwestern U.S.
Tim Seymour, who manages the Amplify Seymour Cannabis ETF
CNBS,
said he’s interested in adding to his position in Curaleaf given the stock’s lower price on Tuesday.
“I’d be a net buyer into Curaleaf weakness today,” he said. “I give Curaleaf credit for being the really the only multistate operator on some level that successfully navigated the national grid approach of deciding they wanted to be across the country. Curaleaf has made it to the other side and is the largest player in terms of the top line revenue.”
Alliance Global Partners analyst Aaron Grey reiterated a buy rating on Curaleaf on Tuesday but lowered his price target to C$23 a share from C$29 a share.
“The company noted softness in Northeast markets impacting the quarter,” Grey said in a research note. “While we see near-term softness as a function of specific market dynamics and oscillating maturity curves, we also believe 2022 could see softer growth than we had previously modeled amid maturing markets (and delays in adult-use sales beginning).”
On the plus side, Grey sees Curaleaf’s research and development, as well as its geographic presence both in the U.S. and abroad as “positioning the company for long-term profitable growth despite various federal outcomes,” he said.
Meanwhile, Cowen analyst Vivien Azer late Monday reiterated her outperform rating on Curaleaf and said its sequential revenue growth beat her forecast.
“In terms of state-specific call-outs we would note the emphasis on Florida, where the company has been criticized by some for promotional discounting,” Azer said in a research note. “However, this looks to be working in CURA’s favor, as the company’s in-state profitability is above the corporate average (over 30% adjusted Ebitda), while also having allowed the company to nearly double its market share year-to-date.
Curaleaf shares are down 19.6% so far this year, compared with a rise of 2% by the Cannabis Growth ETF
THCX,
See also: Can industrial hemp become a sustainable building material? These private investors think so.
This post was originally published on Market Watch
