US cannabis play iAnthus Capital Holdings (iAnthus Capital Holdings Stock Quote, Chart, News CSE:IAN) is getting a 25 per cent target cut from Russell Stanley of Beacon Securities. While still giving the stock a “Buy” rating the analyst says that his new estimates, which are reflecting a slower pace to revenue growth, have pushed his price target from C$16.00 to C$12.00 per share.

iAnthus Capital owns and operates cultivation, processing and dispensary facilities across the United States, with core business in Florida, New York and Massachusetts. The company has seen its share price dwindle in recent months, falling from C$8.00 in late March to where it currently trades in the high-C$3.00 range.

In an update to clients on Monday, Stanley points to data from the Florida Department of Health’s Office of Medical Marijuana Use, which publishes a regular report featuring sales volume numbers for each licensee in the state. From that data, Stanley estimates iAnthus’ market share at about 2.2 per cent during the month of May and improving to 2.7 per cent for June.

He writes, “While the market share improvement is impressive, our prior revenue estimate for Florida was $5 million, which is more reflective of a 10 per cent-plus market share. We therefore reduced our Q2/19 Florida revenue estimate to $1.0 million.”

The analyst also reduced his revenue estimate for New York from $5 million to $0.3 million, along with similarly reducing estimates for other markets including Massachusetts.

All told, Stanley is now calling for fiscal 2019 revenue and adjusted EBITDA of $123 million and negative $16 million, respectively, and fiscal 2020 revenue and adjusted EBITDA of $313 million and $93 million, respectively. Adjusted EPS for 2019 is now negative C$0.26 per share and for fiscal 2020 is C$0.24 per share. (All figures in US dollars unless noted otherwise.)

Ahead of iAnthus Capital’s second quarter report due on Tuesday, August 27, Stanley says he is looking for updates on the company’s buildout plans and potential M&A activity. For its fiscal first quarter 2019, delivered on May 30, iAnthus recorded revenue of $9.6 million, lower than the consensus expectation of $14.9 million, and a net loss of $18.3 million or $0.15 per share.

For the Q2, Stanley is calling for revenue and EBITDA of $21 million and negative $8 million, respectively, down from his prior forecast of $35 million and $2 million, respectively.

On August 1, iAnthus sent out a press release on its progress in the state of Florida, attesting to its five dispensaries already opened with another in the key market of Miami to be opened on August 5 through its GrowHealthy medical marijuana operation. Subsequent to that release, iAnthus announced on August 7 that the Miami opening would be delayed “due to a postponement in the receipt of the final certificate of occupancy.” The company is now calling for stores in Miami, Gainesville, Lakeland and Bonita Springs to be opened in upcoming weeks.

“Since opening our first Florida dispensary in December 2018, we have grown our market share from 0% to 3% within our first 7 months of retail operations in one of the largest medical markets within the United States,” CEO Hadley Ford said.

Stanley is continuing to value IAN with a 24x EV/2020 EBITDA multiple. His revised target of C$12.00 per share represents a projected 12-month return of 220 per cent at the time of publication.

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