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On Thursday, Craig-Hallum maintained a Buy rating on Turning Point Brands (NYSE:TPB) and raised the price target to $75 from $60, aligning with the stock's impressive 142% year-to-date return.
The adjustment follows a series of virtual non-deal roadshow (NDR) meetings hosted by the analyst firm with Turning Point Brands management on Wednesday. According to InvestingPro data, the company maintains a perfect Piotroski Score of 9, indicating exceptional financial strength.
The analyst firm's increased price target reflects a positive outlook on the company's nicotine pouch market potential, which is seen to have a larger total addressable market (TAM), revenue, margin, and near-term production capacity than previously anticipated.
These factors contribute to the firm's projection of continued significant upside in TPB shares. With a market capitalization of $1.13 billion and strong analyst consensus (1.25, where 1 is a Strong Buy), the company appears well-positioned for growth, though InvestingPro analysis suggests the stock is currently trading slightly above its Fair Value.
The meetings with Turning Point Brands management led to heightened optimism about the company's future performance. The analyst firm has updated its financial estimates for Turning Point Brands, increasing its 2025 projections and introducing estimates for 2026.
The company's current EBITDA of $97.5 million and P/E ratio of 22.9x reflect its strong operational performance. Discover more detailed insights and 15 additional ProTips about TPB on InvestingPro, including comprehensive valuation metrics and growth indicators.
The firm's confidence in Turning Point Brands is bolstered by the company's strategic position within the rapidly growing nicotine pouch category. The expectation is that as the company continues to deliver on its business plan, the momentum in the stock will persist.
Craig-Hallum's new price target of $75 is based on a valuation of 14.5 times the firm's 2026 estimate of enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA), which is projected to be $112.4 million. This valuation reflects the firm's bullish stance on the company's growth trajectory and market opportunities.
In other recent news, Turning Point Brands witnessed robust financial performance in the third quarter of 2024, with adjusted EBITDA climbing 11% to $27.2 million. The company's popular Zig-Zag and Stoker's brands reported revenue increases of 6% and 12% respectively, contributing to total Q3 sales of $105.6 million. Turning Point Brands has also raised its full-year 2024 adjusted EBITDA guidance to between $101 million and $103 million, reflecting confidence in its ongoing business strategies.
Oppenheimer recently assigned an Outperform rating to Turning Point Brands, citing the company's strong portfolio and potential for growth. This rating comes with a price target of $65.00. The company's strategic pivot away from mergers and acquisitions, led by CEO Graham Purdy, has positioned it as a mid-single-digit percentage topline grower, generating strong cash flow.
Furthermore, Turning Point Brands announced plans for new product launches and market expansions in 2025, along with a $100 million share repurchase program. The firm's FRE brand reported significant growth, with sales increasing by 342% to roughly $5 million. These recent developments, coupled with a strong liquidity position of over $33 million in cash, underscore a positive outlook for the company's future.
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