CL: Expanded Retail And European Entry Will Support Stronger Profitability

Analysts have modestly raised their price target on Cresco Labs to reflect an updated fair value estimate of approximately 2.30 dollars, up from about 2.16 dollars previously, citing expectations for stronger revenue growth, improved profit margins, a slightly lower discount rate, and a more reasonable future earnings multiple.

What's in the News

• Entered the European Union with the launch of Cresco branded flower in Germany, using the market as a testbed for broader international expansion beyond U.S. cannabis (Key Developments).
• Opened a new Sunnyside dispensary in Proctorville, Ohio, bringing the company's Ohio store count to six and expanding its national retail footprint to 71 locations (Key Developments).
• Recorded a third quarter 2025 impairment loss of 2.365 million dollars, including 2 million dollars of non cash charges tied to California assets classified as held for sale (Key Developments).
• Shareholders approved the appointment of Baker Tilly US, LLP as Cresco Labs' auditor for the upcoming year at the September 16, 2025 annual general and special meeting (Key Developments).

Valuation Changes

• The fair value estimate has risen slightly to approximately CA$2.30 from about CA$2.16 per share, reflecting a modestly more optimistic outlook.
• The discount rate has fallen marginally to about 6.45 percent from roughly 6.50 percent, indicating a slightly lower perceived risk profile.
• Revenue growth has been revised up significantly to around 3.84 percent from about 0.47 percent, signaling stronger expected top line momentum.
• The net profit margin has been raised meaningfully to roughly 3.08 percent from about 1.20 percent, pointing to improved profitability expectations.
• The future P/E has been reduced substantially to approximately 33.9 times earnings from about 108.4 times, implying a more conservative valuation multiple on projected earnings.