Medicine Man Technologies Inc (SHWZ)

[Future2016]

We update our 2022 estimates to reflect contributions from the New Mexico expansion with our 2022 revenues and adjusted EBITDA forecast now at $238M and $79M respectively. Of this we believe $14M in revenues and $3M in adjusted EBITDA will come from New Mexico operations.

Meanwhile we introduce 2023 estimates for Schwazze at $296M in revenues and $110M in adjusted EBITDA.

Undervalued Stock, Target Offers Meaningful Upside

Schwazze stock has underperformed YTD (-18% since the start of the year). The stock is now valued at an EV/EBITDA multiple of 3.4x our 2022 forecast and 2.4x 2023. The 2022 multiple is well below that of the broader peer group (7.3x) and even similarly sized operators within our coverage (average for Cansortium, Green Rose, Marimed and TILT). We believe execution with ongoing expansion initiatives will translate to outperforming results in the near term and bring greater awareness for the company and stock.

With greater awareness we expect the valuation discount relative to similarly sized peers and even the broader peer group to be eroded a factor that will bring outsized returns for investors.

Our $2.75 Price Target reflects an EV/EBITDA multiple of 5.9x our 2022 estimate and 4.2x 2023. We note that a valuation for
Schwazze in line with the broader peer group would reflect a price target of closer to $3.40 or more than 2x current levels.