Bullish data from Florida is cause for a forecast revision for Trulieve Cannabis (Trulieve Cannabis Stock Quote, Chart, News CSE:TRUL), says Robert Fagan, analyst for GMP Securities, who in a note to clients on Thursday reiterated his “Buy” rating and C$30.00 target, which represented a projected 12-month return of 143.9 per cent at the time of publication.

Since the introduction of smokable flower as a product format in the state of Florida’s medical cannabis market at the end of Q1 of this year, data is showing growth from about $350 million to between $600 and $650 million, an increase of about 80 per cent in just five months, according to stats from Florida’s Department of Health. (All figures in US dollars unless where noted otherwise.)

The uptick bodes well for Trulieve, which currently holds 19 per cent of the state’s total dispensaries with 31 stores open (so far in the third quarter, TRUL opened one store), according to Fagan, who now estimates Trulieve’s market share at about 50 per cent for Q3, entrenching its leading position in the state.

Trulieve Cannabis Florida revenue could hit $75-million…

“We believe TRUL’s Q3/19 revenues in Florida could potentially reach $75 million, which we note excludes contribution from operations in Connecticut and California. Comparing this to our previous street-high forecast of ~$68 million and consensus of ~$64 million, suggests TRUL’s Q3 estimates are too low. Hence, we are raising our near-term forecasts and now calling for Q3 sales of $75 million. We believe there could even be some upside to our new Q3 forecast given stores in CT and CA could have generated ~$2 million in revenue during the quarter,” Fagan writes.

In extract sales alone, Fagan sees TRUL potentially hitting revenues of $50 million for the third quarter, based on Department of Health’s data which shows TRUL selling about 375 kg of extract for the quarter, with average selling prices of $0.10 per mg. For smokable flower for the quarter, Fagan is now estimating sales of about $25 million.

Fagan is basing his target for TRUL on a 17.5x multiple of his 2020 EBITDA forecast and says that the stock is currently cheap compared to its peers.

“With immaterial impact from Hurricane Dorian and strong FL DoH data, our conviction level in TRUL’s Q3 top line is high, prompting us to raise our forecasts. In addition, despite a ~15 per cent rally from recent lows, TRUL’s shares are still attractively valued in our view at ~7x 2020 EV/EBITDA, a 30 per cent discount to peers,” Fagan writes.

On September 9, Trulieve announced two new additions to its management team, naming Chris Kelly, who comes with 25 years of consumer packaged goods experience, as its Director of Wholesale and Chloe Grossman, with over five years of experience in operational, licensing and policy experience in the cannabis industry, to direct organic growth opportunities.

Going forward, Fagan thinks that TRUL will generate fiscal 2019 revenue and EBITDA of $254.3 million and $125.0 million, respectively, and fiscal 2020 revenue and EBITDA of $400.7 million and $146.4 million, respectively.

More from Cantech Cannabis