Cresco Labs (CL): Reassessing Valuation After Historic U.S. Cannabis Rescheduling Boosts Growth Expectations

Cresco Labs (CL) is back in the spotlight after the U.S. government moved to reschedule cannabis from Schedule I to Schedule III, a policy shift management says could materially reshape its tax profile and growth trajectory.

See our latest analysis for Cresco Labs.

The market has started to price in that optimism, with the share price at $1.76 after a 1 month share price return of 55.75 percent and a 1 year total shareholder return of 35.38 percent, even though longer term total shareholder returns remain deeply negative.

If the cannabis rescheduling story has sharpened your interest in healthcare linked growth, you might also want to explore healthcare stocks as potential next ideas.

With Cresco shares still trading at a sizeable discount to analyst targets despite a powerful rally, the key question now is whether investors are looking at an overlooked value play or a stock that already reflects the industry’s next leg of growth.

Most Popular Narrative: 23.6% Undervalued

With Cresco Labs last closing at CA$1.76 versus a narrative fair value near CA$2.30, the current setup leans toward meaningful upside if assumptions hold.

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.

Read the complete narrative.

Want to see why a mature, slow growing business still earns a richer future earnings multiple? The narrative leans on shifting margins, disciplined cash flow and a valuation reset that could surprise you.

Result: Fair Value of $2.30 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, sustained pricing pressure in core states and costly, debt funded expansion or M&A could quickly erode margins and undermine the undervaluation thesis.

Find out about the key risks to this Cresco Labs narrative.

Build Your Own Cresco Labs Narrative

If you see the story differently or want to dig into the numbers yourself, you can quickly build a custom view in under three minutes: Do it your way.

A great starting point for your Cresco Labs research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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