Near-Term Price Compression Weighs on Green Thumb's Fourth Quarter, but Long Term Remains Attractive

Green Thumb's results remained solid though price compression weighed on the fourth quarter. As such, revenue declined 1% sequentially to $259 million and adjusted EBITDA margin narrowed about 100 basis points sequentially to 31%. We anticipated current economic conditions and pricing dynamics to weigh on the fourth quarter, so results were within our expectations. Our long-term outlook remains unchanged as we continue to expect Green Thumb to benefit from widening legalization and organic growth in already-legalized states. Our fair value estimates of $45 and CAD 61 per share are unchanged for no-moat Green Thumb. Shares remain very undervalued as we think the market misconstrues the near-term growing pains and lack of progress on changing federal prohibition as indications of the legal market's long-term potential.