Khiron Life Sciences stock has a 209 per cent upside, says AltaCorp

In a coverage launch, Khiron Life Sciences (Khiron Life Sciences Stock Quote, News, Chart TSXV:KHRN) gets a “Speculative Buy” rating from AltaCorp Capital’s David M. Kideckel, who says the cannabis company is poised to capture a large share of the growing medical cannabis market in Latin America.

Founded in 2017, Khiron was first listed on the TSX Venture in June of 2018. The company was the first in Colombia to receive a license for cultivation and the first to start commercializing cannabis-derived cosmetic products in that country, according to Kideckel, who initiated coverage on July 31.

The company has 1.9 million square feet of licensed cultivation capacity in Columbia and has recently completed the construction of its extraction and analysis lab which has an initial capacity of 3,000 kg of extracts per year. Other operation include those in Chile and Uruguay. Kideckel likes the company’s approach to acquiring customers, through leveraging a network of patients and doctors through its clinic model. The analyst noted that Khiron is an early mover in gaining access to a network of over one million patients and 5,000 physicians in Columbia, a strategy that can be replicated across Latin America.

Khiron Life Sciences Stock is Undervalued, Analyst Says

Kideckel thinks that KHRN is currently undervalued.

“Based on our estimates, Khiron’s medical segment in Colombia is worth ~$1.66/share and the CPG segment is worth ~$0.50/share. At ~$2.16/share, this represents an 11-per-cent premium to Khiron’s current share price,” he writes.

“In our view, the market is completely discounting the value associated with Khiron’s entry into the medical cannabis product segment in other LATAM markets, which we believe is due to the regulatory uncertainty in those markets. However, we expect Khiron’s stock to revalue as the Company successfully enters into countries such as Mexico, Chile, and Brazil. There are several near-term catalysts that could drive the story, including revenues from the commercial launch of CBD in Colombia and new regulatory medical cannabis guidelines in Mexico, both of which are expected to happen in F2019,” he adds.

Kideckel’s “Speculative Buy” rating comes with a price target of $6.00, which represents a projected return of 209 per cent at the time of publication.