On Thursday, Turning Point Brands (NYSE:TPB), a manufacturer of alternative smoking products, received an Outperform rating from Oppenheimer, with a price target set at $65.00. The rating is based on the company's robust portfolio, which includes Zig-Zag rolling papers and Stoker's chewing tobacco, and identifies the firm as a compelling investment opportunity.
Turning Point Brands is recognized for its potential growth within the Zig-Zag segment, particularly through expansion into dispensaries, smoke shops, and headshops. Additionally, the Stoker's segment is noted for achieving higher prices and gaining market share. The company's recent introduction of a nicotine pouch brand, FRE, aims to tap into the rapidly growing market, which is currently valued at approximately $3 billion.
The company is led by CEO Graham Purdy, who has shifted the focus away from mergers and acquisitions as well as vape products. As a result, Turning Point Brands is now positioned as a mid-single-digit percentage topline grower. This strategic pivot has allowed the company to generate strong cash flow, which is expected to strengthen the balance sheet further and enable the return of cash to shareholders.
Oppenheimer's coverage initiation highlights Turning Point Brands' solid financial performance and strategic market positioning. The Outperform rating and $65 price target reflect confidence in the company's direction and its ability to capitalize on growth opportunities in its respective segments.
In other recent news, Turning Point Brands reported a strong financial performance for the third quarter of 2024, with adjusted EBITDA rising 11% to $27.2 million. The company's popular Zig-Zag and Stoker's brands saw revenue increases of 6% and 12% respectively, contributing to the 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.
In addition, the company 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 indicate a positive outlook for Turning Point Brands, supported by a strong liquidity position of over $33 million in cash.
InvestingPro Insights
Turning Point Brands' recent performance and strategic positioning align well with several key metrics and insights from InvestingPro. The company's market cap stands at $974.4 million, reflecting its solid position in the alternative smoking products industry.
InvestingPro data shows that TPB has demonstrated impressive financial performance, with a revenue of $409.41 million in the last twelve months as of Q3 2024. This aligns with Oppenheimer's assessment of TPB as a mid-single-digit percentage topline grower. Moreover, the company's strong profitability is evident in its gross profit margin of 51.29% and operating income margin of 21.83% for the same period.
Two particularly relevant InvestingPro Tips highlight TPB's financial strength and market performance:
1. TPB has raised its dividend for 8 consecutive years, which supports Oppenheimer's expectation of the company returning cash to shareholders.
2. TPB is trading near its 52-week high, with a significant return of 146.44% over the last year, indicating strong market confidence in line with Oppenheimer's Outperform rating.
These insights, along with 13 additional tips available on InvestingPro, provide a comprehensive view of Turning Point Brands' financial health and market position, complementing the analysis in the article.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.