Stock of the Week: Curaleaf

We raised our fair value for the cannabis giant taking on Canopy in Europe

Andrew Willis 22 March, 2021 | 4:28AM

 

 

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Andrew Willis: As the economy starts down the road to recovery, we’ll see whether the slowdown at cannabis giant Curaleaf was a lockdown problem… or whether consumers just didn’t want to buy as much weed as we thought.

We think it’s the former. While revenues were up only 26% in the last quarter, compared to the 55% in the previous quarter, we’d think you’d be remiss to think that this is any sign of weakness for the market’s full potential.

We still forecast the U.S. as having the greatest growth out there, with sector director Kristoffer Inton projecting 25% and 15% average annual growth for recreational and medical markets. And Curaleaf has a presence in 23 states, with a hundred dispensaries.

Meanwhile, Curaleaf is also expanding its European footprint… A giant entrance into the market had us raising our fair value estimate. For the last four quarters, Canopy generated 80 million dollars in the international market, which is likely around twice the size of the Portuguese company Curaleaf just bought.

Curaleaf could at some point catch-up with Canopy internationally. But with local sales still making around 80% of Canopy’s sales, the U.S. may first have to catch up with Canada in terms of consumers.

For Morningstar, I’m Andrew Willis.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Canopy Growth Corp34.73 CAD-4.30
Curaleaf Holdings Inc18.01 CAD-2.28

About Author

Andrew Willis

Andrew Willis  is Content Editor for Morningstar.ca. Follow him on Twitter @AndrewWillisCDN.

 

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