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VEXT has target slashed at Beacon

After quarterly results fell short of his expectations, Beacon Securities analyst Russell Stanley has cut his price target on Vext Science (Vext Stock Quote, Chart, News, Analysts, Financials CSE:VEXT) in half.

On November 28, Vext reported its Q3, 2023 results. The company posted Adjusted EBITDA of $1.08-million on revenue of $8.10-million, a topline that was down from $9.19-million in the same period a year prior.

“Q3 was another challenging period for all U.S. retailers, and cannabis was no exception,” CEO Eric Offenberger said.  “In an already seasonally slow period for Arizona, the consumer remained stretched, which led to continued pressure on retail price points and smaller baskets year-over-year. Despite these ongoing challenges, our team translated effective promotions into solid growth in traffic and transactions. This enabled our stores to perform better than the market and we estimate the additional share will position us well as consumer discretionary spending improves. Furthermore, we expect first harvest out of our Eloy facility in Q1 2024 and, with the sale of our Prescott Valley facility subsequent to the end of the quarter, we are focused on maximizing the sell-through of our own product through our owned retail stores, and with the goal to improve adjusted EBITDA {earnings before interest, taxes, depreciation and amortization] margins over the next several quarters.”

In a research update to clients December 4th, Stanley maintained his “Buy” rating but cut his price target on Vext from $0.80 to $0.40, implying a return of 45 per cent at the time of publication.

“We have reduced our PT from C$0.80/sh, having taken our F2024 adjusted EBITDA forecast from $22M to $17M, while updating our share count for the recent equity financing,” the analyst explained. “We continue to view VEXT as the company most levered to Ohio, where voters recently approved an adult-use legalization measure, and VEXT is predicting initial AU sales in Q3/24.”

Stanley thinks Vext will post Adjusted EBITDA of $8-million on revenue of $36-million in fiscal 2023. He expects those numbers will improve to EBITDA of $17-million on a topline of $55-million the following year.

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