JWEL stock keeps “Outperform” rating at National Bank

He’s still a believer in the stock, if only a little less so.

As reported by the Globe and Mail, National Bank Financial analyst Zachary Evershed January 8 maintained his “Outperform” rating on Jamieson Wellness (Jamieson Wellness Stock Quote, Chart, News, Analysts, Financials TSX:JWEL) but cut his price target on the stock from $43.50 to $38.50.

Evershed says there is still room for JWEL to grow by fixing some fundamental errors.

“Though we consider Jamieson products to be in a mature phase in Canada, that does not preclude robust organic growth,” the analyst wrote. “Management notes that the company’s large market share was achieved despite being underindexed on physical shelf space. Pushing for shelf presence more in line with overall market share would allow JWEL to place more products in front of customers, which we believe may drive organic growth of 4-5 per cent annually. Growth drivers also include sustained innovation through new products and Canadian demographic tailwinds.”

Evershed says China could become a big growth area for JWEL.

“On the back of the DCP Partnership (Editor’s note: DCP Capital is a Beijing private equity firm that specializes in consumer brands) headquartered in as well as the distribution asset acquisition in China, the company expects growth to accelerate in Asia,” the analyst sais said. “Growing within the domestic retail market, increasing penetration in club, and especially expansion via its e-commerce platform are expected to put JWEL’s sales on a 20-30-per-cent growth trajectory over the next several years. Cross-border ecommerce opportunities remain extremely attractive in retail, with online penetration of 40-50 per cent in VMS [Vitamins, Minerals and other Supplements]. We estimate that the VMS category has grown at a 10-per-cent CAGR [compound annual growth rate] over the last five years, providing a significant growth runway for a small player. Weighing a potential global economic downturn, management notes its Chinese clientele is actively seeking foreign products for their superior quality over domestic products and are generally affluent, and thus, are less likely to compromise on their healthy habits.”

At press time, shares of Jamieson were down 1.4 per cent to $29.94.