WeedMD has 165% upside, Mackie Research says

Amid a flurry of activity, Mackie Research Capital analyst Greg McLeish has resumed coverage of WeedMD (TSX:WMD) with the same bullish take.

In a research update to clients today, McLeish maintained his “Buy” rating and one-year price target of $4.00 on WeedMD, implying a return of 164.9 per cent at the time of publication.

McLeish notes that WeedMD on July 10 terminated its agreement with Hiku Brands, which was instead acquired by Canopy Growth Corp. But the exercise was not one of complete futility, the analyst points out, because WMD received a $10-million termination fee in connection with the arrangement.

“The company currently has $50 mm in net cash and it is fully funded for 50,000 kg of cannabis production capacity at existing licensed facilities,” the analyst notes. “This strong cash position will also allow management to pursue strategic acquisitions and address potential working capital requirements.”

McLeish thinks WeedMD will generate EBITDA of negative $6.5-million on revenue of $19.1-million in fiscal 2018. He expects those numbers will improve to EBITDA of $16.6-million on a topline of $73.6-million the following year.