Following an acquisition announced this morning, Beacon Securities analyst Russell Stanley is maintaining his bullish stance on iAnthus Capital Holdings (iAnthus Capital Holdings Stock Quote, Chart CSE:IAN).
On Friday, iAnthus announced it had entered into a letter of intent to acquire CBD For Life, which it described as “…a top-ranked, national CBD (cannabidiol) brand in the United States.”
“Developing a strong CBD strategy is mission critical for cannabis companies to compete on a national scale while simultaneously entering the consumer product and retail marketplace,” CEO Hadley Ford said. “With the acquisition of a name brand like CBD For Life, iAnthus is well positioned to increase our market share with greater exposure to patients and customers across the country.”
Stanley says this is a “timely” acquisition given that major retailers have entered this product category. The analyst says he continues to see the stock as undervalued, despite a recent share price run-up.
“IAN currently trades at approximately 10x our estimate for C2020E EBITDA, representing a 52% discount to the 21x average of the broad peer group and a 72% discount to the 37x average amongst companies with a C$1B+ market capitalization. Potential upcoming catalysts include the Q4/18 results on April 1, the completion of dispensaries across its 11 states and further M&A activity. The stock is up 7% this week and 49% the last 3 months.”
In a research update to clients today, Stanley maintained his “Buy” rating and one-year price target of $16.00 on IAN, implying a return of 113 per cent at the time of publication.
Stanley thinks iAnthus will post Adjusted EBITDA of $25.0-million on revenue of $188-million in fiscal 2019. He expects those numbers will improve to EBITDA of $121-million on a topline of $341-million the following year.
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