Pardon the pun, but cannabis marketing company Lift & Co (Lift & Co News, Stock Quote, Chart TSXV:LIFT) is getting ready to grow like a weed. So says Mackie Research analyst Nikhil Thadani, who on Tuesday initiated coverage of the stock with a “Speculative Buy” recommendation and $0.80 per share target price.
Known for its cannabis industry events and shows, including the Canadian Cannabis Awards, Lift was founded in 2014 as an informational blog on Canada’s licensed producer medical cannabis system. The company is aiming to move beyond events and focus on marketing and analytics in the cannabis space, which Thadani says has yet to become ‘CPG-like’, which would involve advanced analytics to generate branding, advertising and distribution.
“The newly formed recreational cannabis industry lacks important marketing components due to regulatory restrictions, a lack of historical data and an initial supply-demand imbalance. At the same time, millions of new consumers are not well versed with relevant products and offerings, which provides Lift an opportunity to close the marketing gap,” says Thadani, in a coverage launch to clients.
“While current industry priorities centre on supply and distribution issues, in about 18 months once these issues have been navigated, industry participants will turn focus to attracting and retaining customers. Lift’s Canadian retail opportunity is just getting started — Lift’s CannSell could have an addressable opportunity of ~$60 million in Ontario. Cannabis 2.0 is likely a positive catalyst for data insights owing to greater product variety & need for providing customers more product information. We would view any potential entry by Lift into the USA, (likely California first very positively),” he says.
While refraining from providing financial estimates, Thadani says they will come in a few quarters’ time with further visibility on the company’s build-out. In the meantime, the analyst’s valuation stems from relative valuation and a discounted cash flow model, using a 4x multiple applied to Lift’s potential calendar 2021 revenue, which Thadani says could approach $20 million overlaid on the company’s current fully diluted share count.
Thadani’s $0.80 target represented a projected 12-month return of 207.7 per cent at the time of publication.