GURU stock is a buy, Roth says

Following the company’s third quarter results, Roth MKM analyst Sean McGowan has maintained his “Buy” rating on GURU Organic Energy (Guru Organic Energy Stock Quote, Chart, News, Analysts, Financials TSX:GURU).

On September 14, GURU reported its Q3, 2023 results. The company posted an Adjusted EBITDA loss of $3.01-million on revenue of $8.87-million, 15 per cent better than the same period a year prior.

“Q3 was Guru’s best quarter to date with record net revenue of $8.9-million and a significant reduction in net loss, as we continue to focus on growing our business efficiently through targeted investments in marketing and improved in-store execution with our exclusive distribution partner in Canada. Increased sales velocities, mainly in major Canadian urban centres, along with our new Guru Fruit Punch, continued to fuel our growth,” said Carl Goyette, president and chief executive officer of Guru Organic Energy.

McGowan says it wasn’t exactly a beat across the board, but adds that he was more than satisfied with the company’s third quarter results.

“GURU’s 3Q’23 revenues were right in line with our estimate. While gross margin was lower than our forecast, other operating expenses were dramatically lower, resulting in a much lower EBITDA loss. We expect the company to grow revenues in Canada at least in line with the energy drink category’s growth rate (mid-teens YoY), and faster in the US. That growth and continued tight cost management should result in steady improvement in adjusted EBITDA.”

In a research update to clients September 19, the analyst maintained his “Buy” rating and one-year price target of $5.75 on GURU.

McGowan thinks GURU will post an EBITDA loss of $11.9-million on revenue of $29.8-million in fiscal 2023. He expects those numbers will improve to EBITDA of negative $10.4-million on a topline of $34.8-million the following year.