Investors looking for a pot stock with upside should look no further than MedReleaf (TSX:LEAF), Echelon Wealth Partners analyst Russell Stanley says.
This morning, MedReleaf announced it had completed the $25-million acquisition of a one-million square-foot greenhouse facility near Exter, Ontario.
“Medreleaf is advancing on all fronts through focused capacity expansion, innovative brand and product development, and significant supply agreements that reinforce our position as one of the leading producers of premium cannabis to the Canadian adult-use and global medical markets,” CEO Neil Closner said. “The Exeter facility expansion will add timely capacity to support market share leadership in our target segments while maximizing long-term return on invested capital.”
Stanley says this is one of several things that could make the stock move.
“We estimate that the Exeter assets combined with the Company’s two indoor facilities support aggregate fully funded capacity of at least 140,000kg,” the analyst notes. “Further potential catalysts include capacity expansion and/or acquisition updates, branding and product development news, partnerships and improved financial results.
In a research update to clients today, Stanley maintained his “Speculative Buy” rating and one-year price target of $32.50 on MedReleaf, impying a return of 93 per cent at the time of publication.
Stanley thinks MedReleaf will generate EBITDA of $1.9-million on revenue of $43.9-million in fiscal 2018. He expects those numbers will improve to EBITDA of $45.1-million on a topline of $137.4-million the following year.