FRAMINGHAM, Mass. – After advising that Trulieve (OTCQX:TCNNF) was still a buy back in mid-November, the author later made the decision to sell a significant portion of their holdings in the company. It was noted that while Trulieve is still favorable in comparison to other Multi-State Operators (MSOs), the increase in its stock price led the author to change their rating to Neutral. This decision was explained in a recent update.
Trulieve’s stock is currently at a near one-year high, which is not uncommon for MSOs. However, the New Cannabis Ventures Global Cannabis Stock Index is experiencing a 15.5% decrease over the past year. Despite this, Trulieve has only dropped 1%, which places them below the Tier 1 MSOs. In fact, they are the only MSO to experience a decline.
Taking a look at a longer time-frame, Trulieve has dropped the most since the market peaked. Since the end of 2020, the company has experienced an 85.7% drop. From a technical perspective, there is support near $5 and at $3.50, close to the all-time low set last year. Resistance is seen at $7.50, which is only a 10.6% increase.
When discussing the outlook, analysts projected 2024 revenue of $1.114 billion in mid-November. They also projected adjusted EBITDA of $313 million. This projection continues to remain steady. Trulieve’s dependency on the Florida cannabis market was highlighted, with concerns raised regarding the market’s slowing growth in patients and revenue.
The company’s valuation was also analyzed, with Trulieve and all of the Tier 1 MSOs being deemed cheap relative to their historical trading values. Additionally, the market uses enterprise value relative to projected adjusted EBITDA to assess valuation. Trulieve’s price to tangible book value was also examined, showing that it’s not as bad as its peers, but also not as good as others in the market.
In the conclusion of the article, the author shared that while they like Trulieve more than many MSOs, they also have favorability towards Canadian LPs and ancillary names. The future performance of Trulieve is heavily dependent on whether 280E ends.
