The multi-state cannabis company Jushi Holdings JUSHF, reported a significant increase in unique
patient visits in Virginia, indicating robust growth in the fourth quarter of 2023.
Sales reached $67.8 million, exceeding the FactSet consensus of $65.3 million, while adjusted EBITDA stood at
$11.3 million surpassing the expected $10.5 million.
Jushi outperformed financial experts’ expectations in both sales and profits, noted analyst Pablo Zuanic from Zuanic & Associates in a recent equity research report.
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Sturdy Financial Health and Strategic Market Position
Despite facing challenges, Jushi’s balance sheet remains manageable, with a notable improvement in free cash flow trends achieving break-even levels in 3Q23 and 4Q23.
The company aims to address its $55 million debt due by December 2024 through non-dilutive strategies, safeguarding current shareholders’ value.
Currently, the stock trades at 1.5x CY24 EV/Sales, which, according to Zuanic, does not fully reflect the potential growth from Pennsylvania and Virginia moving towards recreational cannabis sales.
Navigating Regulatory Landscape and Expanding Horizons
The report also delves into the state regulatory outlook, especially focusing on Ohio, Pennsylvania, and Virginia, where about 70% of the company’s stores are located.
Virginia is set to kickstart recreational sales by May 1, 2025, contingent on the Governor’s approval.
Simultaneously, Pennsylvania is making strides with bipartisan bills, aiming to finalize recreational sales legislation by June 30, and Ohio is projected to launch recreational sales in 4Q24, offering Jushi additional avenues for expansion.
Market Dynamics and Strategic Valuation
Jushi shares faced a 22% decline over the last 30 days, influenced by regulatory news flow and market dynamics.
However, Zuanic anticipates the stock to outperform the average returns of other stocks in the sector and maintains an Overweight stance, citing its underappreciated market valuation and substantial upside potential from operations in Pennsylvania and Virginia.
Despite ongoing market volatility, Jushi’s strategic positioning and financial well-being point to a promising outlook for investors.
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