In a recently released analyst research report, Jefferies analyst Owen Bennett, CFA reiterated his buy rating on shares of Canadian licensed cannabis producer OrganiGram Holdings, Inc. (TSXV:OGI) (OTC:OGRMF) with a price target that suggests some noteworthy upside to come.
This updated guidance from Bennett comes just hours after OrganiGram announced its financial results for the fiscal second quarter that ended February 28th, 2019, which included the first full quarter of adult-use recreational sales for the company.
Owen Bennett’s price target of $10.00 CAD per share implies a potential upside of approximately 12.99% based on the last traded price of $8.85 CAD per share on the TSXV.
According to Bennett, “OrganiGram delivered impressive Q2 results – its third consecutive quarter of positive EBITDA. Revenues, GM and EBITDA all exceeded estimates and guidance. In our initiation, we argued that OrganiGram’s recreational outlook deserved more value, and we think this is validated by that fact that its Q2 recreational sales were second only to Canopy’s. Further details on plans for vape and beverages were welcome, setting the company up well for October’s launch. Results beat consensus OrganiGram’s Q2 results were generally above consensus. Net revenues were C C$26.9m, slightly above consensus at C$25.5m and previous guidance of “at least” C$25m. Gross margin was also notably strong at 60% (cons. 59%), despite the absorption of medical excise tax, a greater mix of lower-margin recreational sales, and a scaling-up of facilities. Adj EBITDA of C$13.3m beat consensus at c.C$8m.”
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