- Analysts at the investment bank PI Financial say Columbia Care is their top pick in the sector.
- The analysts say the stock could pop more than 200% from the current price.
- Columbia Care has a large presence in New York’s medical-marijuana market.
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It’s been a banner year so far for the cannabis industry, as companies, investors, and consumers ride the tailwinds of New York and other states legalizing marijuana in recent weeks.
But picking stocks to bet on is difficult, as analysts caution that the industry is still in its early days and that it’s far from certain which companies or strategies will end up winning the market.
Still, analysts at the Vancouver-based investment bank PI Financial called New York cannabis company Columbia Care their top pick, due to the company’s strong fourth-quarter earnings and footprint in New York and other states making the medical to recreational cannabis transition.
“We remind investors that this company has the best exposure to medical states that are expected or recently have converted to adult-use,” analysts Jason Zandberg and Joshua Vann wrote.
The analysts estimate that Columbia Care will pull in $769 million in revenue in the next fiscal year, and upped their price target on the stock to $19 from $12.50.
Over-the-counter listed shares of Columbia Care trade at $6.23 as of Monday’s close, meaning the stock could be set to surge more than 200%.
The analysts expect recreational marijuana sales in New York to start in mid-2022. Analysts say it could become a $5 billion to $7 billion market.
With Columbia Care’s major footprint in New York’s medical market — and prime real estate in locations like downtown Brooklyn — it’ll be one of the first companies to be able to flip the switch to selling recreational marijuana, depending on how the rules shake out.
Medical cannabis license holders will be able to convert three medical cannabis stores to recreational shops under the proposed rules.
The legislation allows existing license holders to colocate medical- and recreational marijuana shops, meaning companies that have already spent lots of money on expensive real estate for medical shops would likely have an advantage.