Marijuana stocks remain under pressure, with Green Thumb Industries (GTBIF) experiencing a 10% decline year-to-date as of April 21. The sluggish performance is largely attributed to the stalled progress on U.S. federal marijuana reform. Despite these challenges, analysts maintain a bullish outlook on Green Thumb, with an average price target of $18.50 per share—over 100% above its current trading price.
A recent development could enhance Green Thumb’s earnings potential. The company has shifted from a revenue-based royalty system for its Rythm brands to a flat $70 million annual licensing fee, which will only increase with inflation. This change is expected to improve incremental earnings growth, allowing a larger portion of revenue to flow to the bottom line as the company continues to expand its operations.
For market professionals, this shift in licensing strategy, coupled with the potential for future legalization, presents a compelling case for Green Thumb as a speculative growth opportunity with significant upside.
Source: fool.com