NewLake Capital Partners Inc. (NLCP) PT Raised to $16 at Lucid Capital Markets, Upgrades to Buy

Lucid Capital Markets analyst Craig Kicera raised the price target on NewLake Capital Partners Inc. (OTC: NLCP) to $16.00 (from $14.00) while upgrading to a Buy rating (from Hold).

The analyst comments "We are upgrading NewLake Capital Partners, Inc. (NLCP - OTC) from Neutral to Buy and raising our price target from $14 to $16 given recent discussions within the White House that indicate that President Donald Trump is finally ready to direct his administration to follow through on a campaign promise to unlock the medical use of cannabis as a Schedule III Drug. After meeting with cannabis industry executives in the Oval Office on Dec. 10, Trump is “expected” to issue an executive order instructing senior cabinet officials to reclassify cannabis to a less restrictive category under the Controlled Substances Act (CSA), according to a Thursday report from The Washington Post. While we have been positive on NLCP’s balance sheet (leverage is negligible at 0.2x debt/EBITDA) and its outsized dividend (currently at >13%, and projected to be covered by AFFO through 2026), we have been concerned about the viability of its tenant base as many operators have struggled financially given an inability to deduct operating expenses for tax purposes, as only 27% of cannabis operators were profitable in 2024, down from >50% several years prior. Given this positive momentum, we believe investors should revisit the stock and are upgrading it from Neutral to Buy. Our upwardly revised $16 price target represents 83% of NAV and is 8.5x 2026E FFO, which compares to NLCP’s peer group of cannabis REITs trading at 83% of NAV and 7.5x 2026E FFO."

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