Investors looking for a bargain in the cannabis sector should be considering The Flowr Corporation (Flowr Corp Stock Quote, Chart: TSXV:FLWR), says Clarus Securities analyst Noel Atkinson.
In a research report to clients today, Atkinson initiated coverage of FLWR with a “Speculative Buy” rating and one-year price target of $5.00, implying a return of 55.3 per cent at the time of publication.
Atkinson says FLWR has some advantages that place it in an elite group.
“The Flowr Corporation is one of the very few Canadian licensed producers (LPs) of cannabis with experience in successfully scaling indoor cultivation of premium product,” he says. “Flowr seeks to fill what we see as one of the most lucrative product gaps in the Canadian cannabis sector –premium flower with sufficient capacity to serve a national customer base.”
Atkinson thinks The Flowr Corp. will post Adjusted EBITDA of negative $9.5-million on revenue of $594,000 in fiscal 2018. He expects those numbers will improve to EBITDA of positive $6.8-million on a topline of $6.7-million the following year.
“We believe The Flowr Corporation (“Flowr”) has the potential to be the most successful Canadian cannabis Licensed Producer (LP) focused on serving the superpremium product segment,” Atkinson adds. “The founding production team has decades of collective experience in designing, building and optimizing indoor (or “warehouse”) cultivation projects, most notably for the original MedReleaf facility in Markham, ON (still considered today to be the gold standard for indoor cultivation in Canada). The Company has its cultivation and dried flower sales licenses and supply agreements with at least three provinces including B.C. and Ontario, and is expected to ramp revenues substantially in 2020 as it brings its Kelowna, B.C. campus expansions online.”