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Initiating Coverage: Curaleaf Holdings

By Bill McNarland

We are launching coverage of Curaleaf Holdings (TSX:CURA, OTC:CURLF) and rate it as a “Buy” because of its strengths, particularly its strategic international expansion, outweigh its other challenges. Additionally, we believe that the catalyst of further legalization in key states and regulatory advancements in Europe will support the company’s growth.

Strengths of Curaleaf Compared to Its Peers

Curaleaf demonstrates significant market presence with operations in 17 U.S. states and expanding international markets. The company’s strong retail network and diverse product offerings contribute to its competitive edge. Curaleaf’s strategic acquisitions, such as Can4Med, enhance its distribution capabilities in Europe, positioning it well for future growth. Furthermore, its revenue mix shows a robust retail segment, supported by over 900 wholesale partner accounts, highlighting strong market penetration and operational efficiency.

Weaknesses of Curaleaf Compared to Its Peers

Curaleaf faces challenges with its current ratio, which is below both the median and average, indicating lower liquidity. The company’s total liabilities vs. assets ratio is higher than its peers, suggesting greater financial leverage and potential risk. Additionally, Curaleaf’s recent EBITDA growth is below the median and average, reflecting short-term operational inefficiencies. Its lower Capital Expenditures (CapEx) Margin indicates less investment in future growth compared to competitors, which may impact long-term revenue potential.

Our Forecasts

Based on our analysis, we rate Curaleaf as a “Buy” due to its strong market presence and strategic international expansion. The blended fair value of Curaleaf is calculated to be $5.61, offering a potential upside of 20% from its current price of $4.68. This valuation incorporates the strengths of its diverse product offerings and strategic market expansions, along with the catalysts of regulatory advancements in key markets, suggesting a promising return on investment for shareholders.


Bill McNarland

Bill (William McNarland, CFA) has over 25 years of experience in complementary areas of the capital markets, encompassing private equity and credit due diligence, economic and stock research and corporate finance. He has served on the boards of six different companies and has fulfilled roles as a Trustee and member of the Investment Review Committee for regulated investment funds. Having completed nine degrees and designations, with a notable distinction as a Chartered Financial Analyst, Bill is currently advancing his academic pursuits with a Master's in Psychology. Furthermore, he is a published author of seven books, all of which are available on Amazon.

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