Curaleaf Earnings: Price Compression Weighs on Top-Line Growth Amid Slowed Rescheduling Outlook

We expect to cut our fair value estimate of Curaleaf stock.

4 March, 2025 | 4:50PM
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A display of a medical marijuana product completed in the formulation room during a media tour of the Curaleaf medical cannabis cultivation and processing facility.

Key Morningstar Metrics for Curaleaf Holdings


What We Thought of Curaleaf Holdings' Earnings

Curaleaf Holdings' CURA fourth-quarter net revenue declined 4% over the prior year to $331 million, and adjusted EBITDA margin narrowed 117 basis points to 23%, as US price compression offset growing international medical demand and states with recently opened adult-use markets.

Why it matters: As Curaleaf remains in a growth stage, sales growth is important for achieving scale and expanding profit margins.

  • In response to ongoing price compression, Curaleaf’s Return to our Roots initiative aims to reinvigorate organic growth by improving flower quality. This should benefit price and mix, but we think it may lead to lost volumes, given the strength of the value segment.

The bottom line: We expect to cut Curaleaf’s fair value estimate of C$6.50 per share by a high-single-digit percentage. The cut will mostly stem from slower revenue growth than our pre-results 10-year average annual forecast of roughly 6%.

  • We reiterate our Very High Uncertainty Rating. The risks to realized top-line growth are numerous and dramatically affect cash flows. Still, shares will likely continue trading in 5-star territory even after our fair value cut.

Long view: Management sounded optimistic that President Donald Trump would follow through on his stated support for banking and rescheduling during his campaign. However, we’re skeptical, as none of the issues Trump has focused on during his first weeks in office have included cannabis.

  • The cancellation of a public comment hearing delayed the prospects for easing rescheduling. Moreover, acting DEA head Derek Maltz and Health and Human Services Secretary Robert F. Kennedy Jr. seem unlikely to advance the process.
  • Lower scheduling would not necessarily be a panacea for the cannabis industry, but it could be enough to bring some important benefits, including paying normal tax rates, improved banking access, and a potential listing on a major US stock exchange.

Curaleaf Stock vs. Morningstar Fair Value Estimate

Source: Morningstar Direct. Latest price as of 11:45 AM ET. Data as of March 04, 2025.


The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.

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