Cannabis Wheaton Corp. has big upside, Mackie Research says

Looking for exposure to the cannabis sector that includes a strong management team and balance sheet combined with expansive domestic and international opportunities?

Cannabis Wheaton Income Corp. (Cannabis Wheaton Stock Quote, Chart, News: TSXV:CBW) fits that bill, says Mackie Research Capital analyst Greg McLeish.

In a research report to clients today, McLeish initiated coverage of Cannabis Wheaton with a “Buy” rating and one-year price target of $3.00, implying a return of 92.3 per cent at the time of publication.

McLeish says Cannabis Wheaton is built for what is set to come in the nascent sector.

“The federal government is aiming to legalize recreational cannabis by late summer 2018,” the analyst notes. “We currently forecast that annual demand for cannabis will be at least 795,000 kg in 2018 and licensed producers have been aggressively expanding production capacity to meet this demand. CBW’s unique model is made up of three distinct verticals – upstream, midstream and downstream. This platform provides early stage LPs and late stage LP applicants with non-dilutive financial capital and ongoing regulatory support, in exchange for receiving a minority equity interest, as well as the rights to a negotiated offtake of the cannabis produced. This model allows its partners to access the necessary capital in order to expedite their time to market, and creates long-term value for both the company and its industry partners.

McLeish thinks Cannabis Wheaton will generate EBITDA of negative 27.1-million on revenue of $7.28-million in fiscal 2018. He expects those numbers will improve to EBITDA of positive $35.3-million on a topline of $165.3-million the following year.

McLeish says he likes CBW’s strong senior management team, its leverage for growth in both the medical and the recreational markets, and that it is positioned in cannabis oils and derivative products.