Analysts at M Partners unveiled their top picks for 2015 today and Daniel Pearlstein says Bedrocan Cannabis (TSXV:BED) is his.
Bedrocan Cannabis, which was formed in 2012, is the Canadian licensee of Bedrocan BV, which has been a Dutch government-contracted licensed producer for the past 13 years.
Pearlstein says Bedrocan’s agreement with its Dutch partner is a key differentiator between it and other Canadian licensed producers. He thinks the company is “uniquely positioned” to be a international player. The analyst says Bedrocan’s domestic facility should be licensed by the second quarter of fiscal 2015 and that this will represent a “significant de-risking event” for the company.
Pearlstein says Bedrocan provides a predictable option for doctors.
“We expect physicians will depend on a standardized and consistent product that yields reproducible results in order to dose and monitor patient progress. The medical cannabis cultivated domestically will be identical to the imported product in terms of plant genetics, production techniques, quality control and product standardization. We expect Bedrocan will gain the trust of patients and physicians that can return to purchase the same product each time,” he said.
In a research update to clients this morning, Pearlstein reiterated his BUY recommendation and $1.10 one-year target on Bedrocan, implying a return of 39% at the time of publication. He explains that his target is based on an EV/EBITDA multiple of 15.0x his 2016 EBITDA estimate of $5.1 million.