Cresco Labs has price target chopped at Roth

Its fourth quarter results are in the books and Roth analyst Bill Kirk still thinks there is money to be made on Cresco Labs (Cresco Labs Stock Quote, Chart, News, Analysts, Financials CSE:CL), just a little less than before.

On March 12, Cresco reported its Q4 and fiscal 2024 results. In the fourth quarter, the company posted Adjusted EBITDA of $42.0-million on revenue of $724.0-million.

“In 2024, the team executed with discipline—streamlining operations, prioritizing profitability, and generating record free cash flow,” CEO Charlie Bachtell said. “With $132 million in operating cash flow, a leading brand position in our core markets, and retail productivity that outperforms the industry, our foundation is stronger than ever. In 2025, we’re extending our focus to strategically deploy capital to create growth and maximize returns for the years ahead. It’s a straightforward approach: execute at the highest level, generate cash, reinvest in high-ROI opportunities, and repeat.”

The analyst summarized the results.

“Cresco reported a tempered 4Q, with gross/AEBITDA margins of 49.5%/23.6% below cons 51.5%/25.6% on under-utilized capacity in core markets and outsized pricing pressure,” he wrote. “While remaining exposed to price compression, CL still benefits from its market-leading position in IL, MA, and PA, which should insulate the business from aggressive, smaller peers. Management noted a confident tone regarding M&A and state expansion opportunities, but will remain strategic, with additional capacity coming online in core markets to drive an improved 2H.”

In a research update to clients March 13, Kirk maintained his “Buy” rating and lowered his price target on CL from $2.50 to $2.00.

The analyst thinks the company will post EBITDA of $164.4-million on revenue of $687.4-million in fiscal 2025. He expects those numbers will improve to EBITDA of $184.0-million on a topline of $718.5-million in fiscal 2026.

“While near-term margin headwinds are set to impact along with price compression, CRLBF has 1) The leading position in three key markets worth an estimated $5.4B in 2025 (BDSA), and 2) Leading share on a product level (#2 in concentrates and flower, #4 in vapes and #5 in edibles per BDSA). This helps offset the exposure within the pressured markets while still expecting a tempered 2025,” Kirk added.