2023-06-23 15:26:34 ET
Jefferies said that it is still bullish on the cannabis sector despite sluggish retail sales last year, forecasting double-digit annual growth into 2033.
The investment bank said in a recent note that while retail sales only grew by 2.2% in 2022, it sees sales climbing 13% a year into 2025 and then approximately 10% annually into 2033.
Despite the positive outlook, Jefferies trimmed its industry retail sales estimates. The bank now sees sales of $37.3B in 2025, down from its earlier forecast of $41.4B, and sales of $71.2B in 2033, down from its prior projection of $80.4B. It also now sees federal legalization of marijuana in the US occurring in 2028 rather than 2026.
It added that greater institutional access and liquidity appeared "now closer than ever," but that stock prices "now capture increasingly visible strengths and weaknesses."
Jefferies said that despite "unique" obstacles, "near-term operational delivery still impresses vs. other consumer sectors" and that "price concerns were overdone."
The bank added that "industry headwinds and lack of access to capital should accelerate industry consolidation, and with this, a more rational and profitable industry structure."
Jefferies maintained buy ratings on seven Canadian-listed cannabis stocks it covers, including Cresco, Curaleaf, Green Thumb, TerrAscend, Trulieve, Ayr Wellness and Columbia Care.
More on cannabis stocks:
- Curaleaf: Keep The Cannabis Dream Alive
- Cultivating Profitable Cannabis
- Sen. Schumer said to be “confident” of clearing cannabis banking bill this session
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Jefferies bullish on cannabis, sees double-digit sales growth into 2033