Multi-State Operators (MSO) traded higher on Tuesday after Cantor Fitzgerald categorized four companies as "top picks." In a recent industry report, Pablo Zuanic analyzed the context of MSOs and offered insight on trends driving financial value. Although MSOs ETF fell 25% in June and 49% over the last three months (vs. a 7% drop for the S&P500), he still finds value in the current context.
The MSOs stock performance seems to be masking “encouraging medium and long-term sales trends,” with more states either legalizing cannabis (New Mexico and New Jersey), soon to start recreational sales (RI, CT/NY), or soon voting to legalize (MD, MO).
In addition, Zuanic noted Illinois could see growth accelerate as more stores open, as in the case of Michigan (+22% seq sales trends based on Apri/May data).
“Given mixed top-line trends top-down, declining prices, and cash flow issues for some, we doubt operating fundamentals will provide a spark for the MSO group's top-down (with the exception of those MSOs where NJ will account for a large % of sales). The second-quarter sales data so far are mixed, showing some improvement top-down in sequential terms (…), but not in YoY terms,” Zuanic wrote.
“We think there …