Cresco Labs is a purchase, this analyst says

On Nov. 5, Haywood Capital Markets analyst Neal Gilmer maintained his “Purchase” ranking and US $2.00 goal value on Cresco Labs (Cresco Labs Inventory Quote, Chart, Information, Analysts, Financials OTCBB:CRLBF), saying the corporate continues to streamline operations whereas positioning for worldwide growth.

Cresco reported third-quarter income of US$164.9-million, up 0.8% sequentially and down 8.3% 12 months over 12 months, in step with Haywood’s US$163.6-million estimate and the US$163.8-million consensus. Adjusted EBITDA got here in at US$39.8-million, above the agency’s US$36.0-million forecast, with an Adjusted EBITDA margin of 24.3%. Gross margin was 48.8%, barely under Q2’s 50.6% however forward of expectations. The corporate generated US$6.2-million in working money move, ended the quarter with US$82.0-million in money, and carried a US$309-million senior secured mortgage internet of reductions and issuance prices.

Gilmer mentioned the outcomes have been “stable given a difficult macro backdrop,” highlighting improved effectivity and better-than-expected margins. The finished exit from California “simplifies Cresco’s footprint and removes low-margin operations,” he mentioned, noting the corporate can now give attention to its strongest markets and alternatives for margin growth in 2026.

Cresco additionally introduced plans to enter worldwide markets, starting with a launch of its branded flower in Germany “via an asset-light, test-and-learn strategy.” Operationally, the corporate expects to open two new dispensaries in Ohio early in fiscal 2026, whereas digital engagement continues to rise, 77% of Q3 prospects have been digital consumers, and 62% of Q2 prospects returned in Q3.

Following the quarter, Gilmer made modest changes to his mannequin to replicate the California exit and flat near-term income expectations. He mentioned Cresco stays some of the established U.S. multi-state operators, emphasizing its consumer-packaged-goods technique constructed round a “home of manufacturers,” together with Cresco, Reserve, Mindy’s, and Good Information. The corporate has main operations in Illinois and publicity to medical markets in Ohio, Florida, and Pennsylvania.

“We proceed to view Cresco favourably,” Gilmer wrote. “Administration has carried out a very good job optimizing the footprint and driving efficiencies throughout operations.”

Gilmer forecasts Adjusted EBITDA of US$150.0-million on US$654.5-million of income in fiscal 2025, enhancing to US$155.6-million on US$664.7-million in 2026.

He mentioned the corporate’s strategic focus, robust administration crew, and entry into new markets “ought to place Cresco for regular development into 2026.”