In a recently released analyst guidance update, GMP Securities‘ Managing Director of Equity Research for Special Situations and Healthcare, Martin Landry, reiterated his buy rating on shares of Canopy Rivers Inc. (TSXV:RIV) (OTC:CNPOF) with a higher price target that suggests massive gains to come.
This comes following Canopy Rivers’ recent 2020 outlook, which has some bullish estimates baked in. According to Cantech Letter, “Canopy Rivers recently provided investors with a 2020 outlook, one which calls for $100 million in attributable EBITDA from three of its investees: $50 to $60 million from its 49-per-cent stake in the PharmHouse JV, $20 to $30 million from its 49-per-cent stake in Canapar and $15 to $20 million from its 26-per-cent ownership of Vert Mirabel and the yield from its preferred shares.”
Moved up from $7.50 per share, Martin Landry’s new price target of $10.00 CAD per share implies a potential upside of approximately 149.38% based on the last traded price of $4.01 CAD per share on the TSXV.
Landry says that “RIV’s CY20 attributable EBITDA guidance brings to light a valuation discrepancy of the company’s investments. Based on yesterday’s closing price, the fully-diluted market cap stands at $800 million with ~$150-million of fully-diluted cash and a ~$150-million stake in TerrAscend based on public market prices. This implies an enterprise value of $500 million for $100 million of attributable EBITDA from three investees, a 5x multiple without including any value from RIV’s 12 other investments. In our view, clarity on 2020 EBITDA potential could improve investors’ understanding of the story and lead to a re-rating in RIV shares.”
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