Cannabis multi-state operator Acreage Holdings, Inc. (CSE: ACRG) (OTC: ACRGF) released its second-quarter financial results on Monday, which were followed Tuesday by a report by Cantor Fitzgerald.

The company stated consolidated revenue of $44.2 million, up by 63% from the same period in 2020 and 15% from the previous quarter.

However, these results were not enough to convince Cantor analyst Pablo Zuanic of a guaranteed bright future for the company. The firm maintained a price target of $2.24 on the floating share class (ACRDF), down from a previous price target of $4.80.

The analyst said Acreage stock is more tied to Canopy Growth’s (NASDAQ: CGC) share price than to the company’s own fundamentals.

In 2019, the two companies inked a deal by which Canopy would absorb Acreage if and when federal legalization reaches the U.S. Looking at this scenario, Zuanic said Acreage’s floating shares could still offer opportunity as they currently “trade at a 66% discount to the minimum price if the contingent offer were executed today.”

The firm’s Neutral rating is substantiated by uncertainty around the timing of federal legalization, which would trigger the merger.

Expansion In Sight: “Based on today’s comments by management,” wrote Zuanic, “we believe M&A expansion will focus on expanding scale in the existing footprint (where caps allow it), more than about entering other states.”

Ongoing cultivation expansion in Massachusetts, a recent expansion in Pennsylvania and Illinois and soon-to-come renewed capacity in New Jersey should also fuel this in-state growth.

In a recent earnings call, Canopy Growth implied “it may pursue other paths to enter other states,” which appears to be consistent with Acreage’s plans, according to Cantor Fitzgerald.

Photo by Esteban Lopez on Unsplash

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