Ayr Strategies (AYRWF) PT Lowered to $36 at Cantor Fitzgerald

March 16, 2021 6:59 AM EDT
Get Alerts AYRWF Hot Sheet
Price: $27.08 -3.42%

Rating Summary:
    0 Buy, 0 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 9 | Down: 7 | New: 33
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Cantor Fitzgerald analyst Pablo Zuanic lowered the price target on Ayr Strategies (OTC: AYRWF) to $36.00 (from $39.00) while maintaining a Neutral rating.

The analyst commented, "We welcome the company’s detailed guidance for 2022, with relevant state by state color, re store count as well as magnitude/timing of cultivation expansion. We certainly wish this would be emulated by more MSOs, despite the admittedly many moving parts. That said, to us the AYR guidance seems optimistic. We note that for 2020 sales guidance was $217Mn and EBITDA was $98Mn (as per their Jan 2020 presentation), and numbers came in at $155Mn and $56Mn, respectively. Granted, we realize COVID hit MA/NV particularly hard (due to state restrictions in 2Q20) and permits delays in MA have resulted in the AYR rec stores in the Greater Boston area not opening yet. For 2022 company guidance calls for $725Mn in sales and we are at $648Mn; EBITDA guidance is $325Mn (45% EBITDA margins) and we project EBITDA margins of 38% for EBITDA of $243Mn (25% below guidance). We give management credit for being able to deliver metrics in its current two states (NV/MA) above the respective states’ averages, less than two years after integrating the NV/MA assets as a result of the SPAC transaction; this should bode well for assets being integrated in PA, FL, AZ, OH, and NJ. However, we believe the competitive landscape is changing in some of these states as more stores and capacity are added; we also agree with the view recently articulated by the Curaleaf Chairman that long term EBITDA margins for the MSOs will be in the 20-25% range. That should be factored when valuing MSOs. We take 12x EBITDA to set the 12-month price target (the stock discount is in the 20-25% range)."



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