Plus Products could be a leader in edibles, says PI Financial

California-based branded cannabis company Plus Products (Plus Products Stock Quote, Chart CSE:PLUS) received a coverage launch from PI Financial Wednesday, with analyst Jason Zandberg saying Plus has a legitimate chance at becoming one of the few nationally recognized cannabis edibles brands.

Plus was ranked the 50th best-selling brand among hundreds of legal products in California when it received its manufacturing license in December of 2017 but has since become the number one edibles brand in the state, one of the largest and the most competitive pot markets in the world.

Zandberg says California’s rollout of adult-use cannabis has not been a smooth one.

“Although the $2.5 billion in 2018 sales makes it the largest market in the US, the market has been held back by structural challenges including licensing and zoning challenges, a pervasive black market. We expect many of these market challenges to be eliminated in the near future which should expand the market size significantly,” Zandberg writes.

Plus’s products include THC and CBD infused gummies sold in over 300 licensed dispensaries in California, with plans to introduce new baked goods and mints over the summer of 2019. The company recently entered into the Nevada market, after which Zandberg expects Plus to expand into other key markets including Arizona, Florida, Illinois and Michigan.

“We believe that PLUS Products represent a cannabis company that has established itself in California and has a great chance to become one of the few national recognized cannabis brands over time,” says Zandberg.

The analyst launches his coverage calling for fiscal 2019 revenue and EBITDA of $23.5 million and negative $3.2 million, respectively, and fiscal 2020 revenue and EBITDA of $72.8 million and $13.9 million, respectively. (All figures in US dollars unless otherwise noted.)

Zandberg is giving Plus a “Buy” rating with a “Speculative” risk rating and a $7.75 target, which represents a 12-month return of 64.9 per cent at the time of publication.