GW Pharmaceuticals is still undervalued, Beacon Securities says

He regards the company as the “undisputed global leader cannabinoid-derived pharmaceuticals”. Today, Beacon Securities analyst David Kideckel initiated coverage of GW Pharmaceuticals (GW Pharmaceuticals Stock Quote, Chart, News: OTCBB:GWPH) with a “Buy” rating and a one-year price target of (U.S.) $200.00, implying a return of 32 per cent at the time of publication.

The analyst thinks there is a strong likelihood that GW’s lead offering Epidiolex® will be approved by the U.S. FDA later this month. This, he says, is an historic development, as it would be the first time the FDA has approved a plant-derived cannboid.

Kideckel elaborated on his reasons for liking the stock.

“We believe that the pharma-grade R&D presently taking place in cannabinoid science coupled with seismic shifts in US federal policy is the path of the future,” he said. “With the positive tailwinds surrounding the cannabinoid science pharmaceuticals space, we formally launch coverage of the sector. Our first pick is GW Pharmaceuticals, who is internationally recognized as the global leader in cannabinoid-derived pharmaceuticals.”

Kideckel thinks GW will post Adjusted EBITDA of negative $207.9-million on revenue of $3.6-million in fiscal 2018. He thinks those numbers will improve to EBITDA of negative $159.9-million on a topline of $64.3-million the following year.

The analyst says GW has the potential to be a groundbreaking company.

“If approved by the FDA, this will be the first ever plant-derived cannabinoid-derived pharmaceutical approved in the US. Further, because the US DEA considers any component of the cannabis plant to be a Schedule I substance, it will force this US federal agency to reschedule the drug as a Schedule II, III, IV, or V substance,” he notes. “The DEA would also have the option to deschedule cannabis/cannabidiol (CBD) altogether. This process of reclassification can take up to 3 months from the PDUFA date. This is nothing short of historic policy change. We thereby coin the term cannabinoid-derived pharmaceuticals in this new and exciting industry, with GW blazing the trail.”