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iAnthus could make a splash with CBD products: Beacon

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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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
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