Organigram has price target cut by Raymond James

Canadian cannabis licensed producer Organigram Holdings (Organigram Holdings Stock Quote, Chart, News TSX:OGI) is staying active on the innovation front but declining market share has Raymond James analyst Rahul Sarugaser staying put with his “Market Perform 3” rating on the stock.

Ahead of quarterly earnings from the company, Sarugaser delivered an update to clients on Friday where he dropped his target price from $5.00 to $3.00 on expectations of flat revenue and a drop in market share.

Moncton, New Brunswick-based Organigram has indoor grow facilities for the recreational and medical markets along with international business and a portfolio of cannabis brands. The company has seen its share price fall over the past year and a half, tumbling from above $10 as of June 2019 to now sub-$1.50 territory.

Expected to report fourth quarter fiscal 2020 results (quarter end August 31) sometime over the next few weeks, OGI last reported in July where its fiscal Q3 featured revenue of $18.0 million compared to $24.8 million a year earlier and an adjusted EBITDA loss of $24.7 million compared to positive $7.7 million a year earlier.

At the time, management pointed to COVID-influenced production delays as a factor in the lower numbers, those coming just at a time when cannabis sales nationwide had been on the upswing during the pandemic.

As for the upcoming Q4 release, Sarugaser thinks a continued decline in market share is in the cards.

“This year, we’ve seen OGI’s market share decline materially — from ~6 per cent in 1Q20 to ~4 per cent in 3Q20 — which we attribute mainly to COVID-19 oriented logistical challenges causing OGI to miss the significant windfall engendered by large-format, deep value cannabis offerings in early and mid-2020,” Sarugaser wrote.

“Channel checks indicate that 4Q20 showed a continuation of in this downward market share trend, with OGI capturing