Cansortium is poised to become an “eminent global cannabis company”, says Paradigm

US cannabis play Cansortium (Cansortium Stock Quote, Chart CSE:TIUM.U) got a coverage launch on Friday from Paradigm Capital’s Rahul Sarugaser, who started out with a “Buy” rating, saying TIUM.U has some of the strongest fundamentals and highest potential for growth among cannabis companies that he has analyzed.

“Cansortium’s impressive revenue, yielded mainly from Florida, the company’s most mature market, coupled with the high rates at which each of its addressable medical markets are expanding, is a strong dual signal indicating the company’s potential for material near-term growth,” Sarugaser said in a coverage initiation on Friday. “With world-class regulatory expertise, the intense growth of its current markets, and an ever-expanding footprint of gold-standard operations, we believe TIUM is poised to become an eminent global cannabis company.”

Miami, Florida-based Cansortium is a vertically-integrated company for the medical cannabis market in Florida, where it operates ten dispensaries and has 20 more either in development or planned, along with business in Texas, Pennsylvania, Michigan and Puerto Rico as well as in Columbia, Brazil and Canada.

Sarugaser says the company has done well in quality assurance and compliance wins giving it early footholds in large, still-emerging markets.

“TIUM has made a practice of entering the medical cannabis markets of states and nations on the ground floor—the moment those jurisdictions open their doors for a limited set of cannabis companies to bring about the first incarnation of its medical cannabis program. Typically, these introductory programs are small and meticulously regulated, and, typically, TIUM’s applications for entry are top-ranked among the hundreds of aspiring groups, owing to company’s rich experience in pharmaceutical compliance and operations. TIUM is planting seeds in what will become some of the world’s largest cannabis markets: a gold-standard opportunity in a still fledgling global cannabis arena,” he says.

For its fiscal 2018, Cansortium generated $8.1 million in revenue with an EBITDA loss of $13.9 million. Sarugaser thinks the company will generate fiscal 2019 revenue and EBITDA of $69.8 million and $17.7 million, respectively, and fiscal 2020 revenue of $167.4 million and $52.2 million, respectively. (All figures in US dollars unless noted otherwise.)

Using a discounted cash flow analysis of net revenue, Sarugaser has come up with a 12-month target price range of between C$2.40 and C$3.40, which at the time of publication represented a return of between 44.7 per cent and 113.8 per cent.