Ayr Wellness Flexes As Market Takes Notice

Ayr Wellness Inc. (OTC: AYRWF) hasn’t been around that long but has quickly proven itself to be a contender. Ayr Wellness just announced its 37th dispensary opening in Florida under the Liberty Health Sciences umbrella in Key West. The 1,500 sq. ft. location sits on the main strip of Downtown Key West. The dispensary features a selection of flower products, in addition to the company’s newly launched Origyn concentrates and Big Pete’s Cookies.

Jonathan Sandelman, CEO of Ayr, said, “We are continuing to execute on our Florida plan, opening in prime locations while continually enhancing our cultivation efforts to make us the highest quality cultivator at scale in the state. Our updated product offerings, including a diversified strain selection and launch of Origyn Extracts and Big Pete’s Cookies, have already contributed to an improved customer experience, and the results are beginning to show.”

Viridian analyst Jonathan DeCourcey recently named Ayr Wellness his top MSO (multi-state operator) pick, giving the company a $42 target price. Ayr Wellness was lately selling at $28. AYR management has said it believes its revenues can hit $725 million in 2022 and DeCourcey thinks that could actually be a conservative number.

DeCourcey believes the company is “poised for a sizable second-half ramp in results and more importantly transformational growth in 2022 and beyond.” This is a big compliment considering the company has fought its way through the tough markets of Massachusetts and Nevada. The slow roll of the Massachusetts adult-use market crashed headlong into the pandemic lockdowns. While other states allowed the sale of adult-use to continue, Massachusetts declared only medical marijuana could be sold during those trying times. This setback along with licensing delays wreaked havoc on the business plans of many companies in the state.

“Massachusetts will be an outperforming growth market for Ayr,” wrote DeCourcey. “Given the Back Bay location, we expect the dispensary to quickly become one of the most productive in the state. Overall, we expect Ayr’s Massachusetts revenues to grow from roughly $57 million last year to $102 million in 2021 and $ 131 million in 2022.”

Nevada also faced the complete shutdown of tourism for months and Ayr’s exposure to the state looked risky. Now, however, this state is roaring back to life.


One thing DeCourcey likes about Ayr is its acquisitions into high-growth states. The company has planted its flag in Arizona, Florida, Pennsylvania, Ohio, and . He wrote, “In each expansion market, Ayr is building out assets both in terms of cultivation capacity and retail footprint. We expect AYR will quickly gain a leading share within each new state in the near term given the company’s track record of integrating assets and executing profitable operations amidst challenging conditions.” Beyond these moves, the company is still positioned to add more. It has approximately $210 million in cash following the four closed acquisitions and will need to spend $41 million to complete New Jersey. The company has said it plans to spend $127 million on its next round of acquisitions. The analyst suggested Connecticut of New York as possible states for expansion. Although he did suggest that the region would be the most likely place for a near-term move especially on the wholesale side. Perhaps Glass House is in play now that its deal with Mercer fell through?

In Closing

The analyst thinks that the company’s many acquisitions had the unfortunate timing to coincide with the recent bear market in cannabis stocks. He thinks the valuation is unfairly discounted despite the company’s execution. He noted that New Jersey’s numbers haven’t even been factored into his own model. “We believe the valuation discount is unwarranted, making Ayr one of the top investment opportunities in cannabis and our top pick amongst MSO’s.”


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