SHWZ - Schwazze (SHWZ) - The Acquisition Beat Goes On

More Cultivation Expansion. Schwazze has entered into an agreement to acquire the assets of Brow 2 LLC. Denver-based Brow 2 operates a 37,000 sq. ft. building, including 27,000 sq. ft. of canopy, for indoor cultivation and related equipment. Brow 2 adds high-quality flower cultivation capacity and new strain genetics to Schwazze's portfolio. The price for the acquisition is $6.7 million to be paid in cash at closing, which is expected before the end of the third quarter of 2021.More to Come? We believe Schwazze will continue to target expansion on the cultivation side as ownership of production provides the Company with a controlled source of differentiated product for both its retail and wholesale operations as well as a better overall margin profile than outsourced product. Schwazze's integrated operating capabilities provide a cost advantage over mom and pop operators that can make the Schwazze platform an attractive alternative, in our view.Announces Home Delivery. Schwazze also announced the start-up of cannabis home delivery services to residences in the city of Aurora, Colorado (a suburb of Denver), the third largest city in Colorado with a population of nearly 400,000. Currently, the delivery service will be available from one Star Buds location in the city with plans to expand to another Star Buds location later this year. We are hopeful approval for home delivery in Denver will be obtained in the near future.Maintaining Outperform. We are maintaining our Outperform rating and $4.00 twelve month price target. At our price target, SHWZ shares would trade at 4x projected 2021 revenue and 13.8x projected 2021 EBITDA on a fully diluted basis. Read More >>