Gerald Pascarelli, an analyst from Needham, has initiated a new Hold rating on Turning Point Brands (TPB).
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Gerald Pascarelli has given his Hold rating due to a combination of factors that reflect both opportunities and current market conditions for Turning Point Brands. The company shows promise with its nicotine pouch segment, which has the potential to significantly boost revenue in the long run. Additionally, the growth of its Stoker’s smokeless tobacco business and the increasing consumer adoption of Zig-Zag products in the cannabis market contribute positively to its diverse revenue streams.
However, despite these positive aspects, Pascarelli notes that the current valuation of Turning Point Brands already incorporates much of the anticipated growth, particularly the high expectations surrounding the nicotine pouch opportunity. The stock is trading at a multiple of 14 times, suggesting that the market has already priced in these growth prospects. As a result, Pascarelli believes that a Hold rating is appropriate, indicating that investors should maintain their current positions rather than buying more shares at this time.