The Canadian Bioceutical Corporation (CSE:BCC) is a unique play on a rapidly growing market in the United States, says Echelon Wealth Partners analyst Russell Stanley.
In a research report to clients today, Stanley initiated coverage of The Canadian Bioceutical Corporation with a “Speculative Buy” rating and one-year price target of $0.65, implying a return of 63 per cent at the time of publication.
Stanley says the story of the public markets for cannabis has largely been about Canada. But he says that while the regulatory environment in the United States is less clear, the market potential is huge.
“Cannabis investors have largely focused on the Canadian market thus far, overlooking attractive opportunities to the south,” says the analyst. “BCC is one of a handful of US operators trading on a recognized exchange. As of writing, 29 states now have medical cannabis programs, and 8 of those states have legalized (or are in the process of legalizing) adult/recreational use. Aggregate retail sales of cannabis are expected to grow at a 28% CAGR, expanding from US$4.3B last year to US$14.5B in C2021. Including announced acquisitions, BCC has operations in states expected to generate aggregate retail sales of US$2.6B in C2020, and they already have ≈188,000 registered medical consumers (i.e., more than all of Canada’s ≈150,000).”
Stanley says The Canadian Bioceutical Corporation is building a multi-state, vertically integrated cannabis business. And he expects the company will be busy.
“This,” says the analyst, “will involve continued acquisition activity, followed by organic growth of those assets post-transaction. The Company has already acquired operations in Arizona, and has announced plans for further acquisitions in Nevada, Massachusetts and Maryland, all of which are expected to close by the end of June 2017.”
Stanley thinks The Canadian Bioceutical Corporation will post Adjusted EBITDA of $4.8-million on revenue of $29.4-million in fiscal 2018. He expects those numbers will improve to EBITDA of $11.9-million on a topline of $47.9-million the following year.