Cantor Fitzgerald initiates coverage of three cannabis stocks, with Verano drawing higher rating

“Yes, the entire MSO sector is generally inexpensive, but we suggest investors buy the larger and more established names, with above average financial and operational metrics,” Zuanic said. “We believe Verano fits all those criteria.”

Zuanic set a 12-month price target of $10 for Verano’s stock, which closed below $4 a share on Thursday.

Ascend Wellness
AAWH,
+0.74%
drew a neutral rating and a $1.75 price target for its stock, which closed Thursday at $1.35 a share.

Zuanic said some of the company’s stores, such as those in Rochelle Park, N.J., and Collinsville, Ill., rank among the best-performing in the country.

“A combination of great locations and superior retail service/execution, in our view, makes Ascend stores stand out,” with sales growth well above its peer group, he said.

On the downside, Zuanic sees challenges for Ascend Wellness’s dispensaries in Illinois, because two of its eight stores in the state are near St. Louis, which is opening up competing adult-use stores now that Missouri has voted to legalize cannabis.

“As with most MSOs, we believe the stock is attractively valued and it should rerate if the group begins to recover,” Zuanic said. “But on a standalone basis, we see better risk/reward in other MSO names.”

In his third ratings move, Zuanic assigned a neutral score to Planet 13
PLNHF,
+3.43%.
While its 122,000-square-foot flagship dispensary and lounge in Las Vegas ranks as “one of the most iconic megastores in the cannabis space,” it also faces a “lack of operational and medium-term growth visibility,” he said.

The megastore concept has a strong balance sheet, but Zuanic said he wonders if it “could be expanded more quickly by a larger operator.”

Zuanic set a target price of 95 cents a share on Planet 13. The stock closed at 88 cents a share on Thursday.