After launching coverage of the stock last week, Echelon Wealth Partners analyst Russell Stanley was impressed with Organigram’s (TSXV:OGI) third quarter results.
This morning, Organigram reported its Q3, 2018 results. The company earned $2.82-million on sales of $3.71-million.
“Our fiscal third quarter was transformational for the company,” CFO Paolo De Luca said. “Our production capabilities have increased exponentially, we launched our adult recreational brand strategy and have signed agreements with a number of provinces and private retailers as well as announcing key significant investments from both a strategic and international perspective. As we head into the launch of the adult-use recreational market we believe Organigram is well positioned to build upon its domestic medical business into becoming a national player in the adult recreational market and a global player in the medical market.”
Stanley says this was a very good quarter, with many catalysts remaining.
“Earlier today, OGI reported Q318 results that we view positively,” the analyst said. “Revenue and EBITDA were both better than we had expected with yields and costs showing strong improvement. Potential catalysts include further supply agreements, a TSX graduation, progress on organic recertification, improved financial results, and strategic investments.”
In a research update to clients today, Stanley maintained his “Speculative Buy” rating and one-year price target of $7.00 on OGI, implying a return of 47 per cent at the time of publication.
Stanley thinks the company will generate Adjusted EBITDA of negative $4.2-million on revenue of $15.7-million in fiscal 2018. He expects those numbers will improve to EBITDA of positive $35.9-million on a topline of $109.8-million the following year.