Weekly Valuation Tracker
Viridian highlights a specific industry sector and provides a deep dive into valuation metrics and comparable company valuations for public companies operating in that sector. The Weekly Valuation Tracker provides proprietary, actionable valuation data.
Weekly Valuation Report – U.S. MSOs with over $500M market cap
- This week’s valuation filter focuses on the seven U.S. MSOs with over $500M market cap. Experience tells us that these companies are likely to be the first to benefit from new money entering the market as they are better known and perceived to be safer.
The group trades at 1st quartile, median, and 3rd quartile EV 2024 Revenues of 2.22x, 2.38x, and 3.26x, respectively, up from 1.66x, 1.93x, and 2.34x on 9/1/23, the first Friday after the HHS news hit.
Similarly, the group now trades at 1st quartile, median, and 3rd quartile EV 2024 EBITDA of 7.34x, 10.11x, and 12.47x compared to 6.26x, 7.31x, and 9.11x on 9/1/23.
The bottom line is that valuations are up significantly on multiple bases but not nearly as much as we thought they would be with an actual DEA agreement to S3.
Theories about the reason for this lackluster response abound. We believe that the chief two causes are a realization that this could take quite a while to actually work its way through the system and a deep sense of wariness from investors who have been fooled too many times. Other possibilities include worries that it won’t get done in time to avoid being reversed by a new administration and concerns about how it will actually dovetail with existing state programs.
Nonetheless, it’s hard to imagine a time when so many shots on goal are available, and valuations have not reflected it. We also note that the first earnings reports are in, and as we expected, generally better than analysts’ expectations. We will review the upcoming revisions for next week’s tracker report.
Valuation Tracker By Sector
The Viridian Value Tracker is the most comprehensive valuation product in the industry.
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- A broad set of 12 valuation measures assures applicability, regardless of whether the company has analyst coverage or revenues. The typically presented EV/ Projected Revenues and EV/ Projected EBITDA are available for less than 1/3 of the cannabis companies we track.
- Most valuation studies present only the average valuation measures, while the Tracker goes one step further and shows the distribution of values (the quartiles, median, and dispersion) for each measure. This gives users a more complete view of how companies in the cohort group are valued.
Weekly Sector Valuation—The Infused Products and Extracts sector, which houses many of the branded companies, has seen a valuation uptick over the last month. Median EV/annualized revenue has jumped to 1.74x from 1.45x the previous month. Median EV/2024 Revenues are now 2.27x for the six analyst-rated companies in the sector.
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Weekly Sector Valuation—The Infused Products and Extracts sector, which houses many of the branded companies, has seen a valuation uptick over the last month. Median EV/annualized revenue has jumped to 1.74x from 1.45x the previous month. Median EV/2024 Revenues are now 2.27x for the six analyst-rated companies in the sector.
