NDVA stock wins price target raise at Echelon

Following a corporate update from Indiva (Indiva Stock Quote, Chart, News, Analysts, Financials TSXV:NDVA) Echelon Capital Markets analyst Andrew Semple has raised his price target on the stock.

On January 4, NDVA issued a corporate update. The company said it expects Q4, 2023 revenue will top $10-million.

“Two thousand twenty-three was an extremely busy year at Indiva, and our results reflect our intense efforts. The growth of the Pearls by Gron brand, our successful launch of No Future gummies and vapes, and the resulting record net revenue for Q4 2023 is a testament to the dedication and hard work of the Indiva team,” CEO Niel Marotta said. “Driven by Indiva’s best-in-class distribution and store penetration, which exceeds 3,000 stores nationwide, Indiva continues to hold leading market share in the edibles category. By the end of November, 2023, Pearls gummies captured the top market share by dollars and units in the edibles category in B.C. and Ontario, with results in Alberta continuing to improve since Pearls launched in that market in May, 2023. Additionally, Indiva has already sold more than two million No Future gummies and over 100,000 No Future vapes since the initial brand launch in B.C. and Alberta in August, 2023. Further, the No Future gummies hit this sales volume in half the time it took Pearls to achieve similar volumes, despite only launching the brand in the largest provincial market, Ontario, in October, 2023. The strength of the Pearls and No Future brands is expected to drive higher revenue in 2024. Finally, Indiva’s profitability in 2023 benefited from investments in automation and process improvement, which are expected to continue to drive our costs lower in 2024, further strengthening our position as the low-cost producer of edibles.”

Semple summarized the development.

“Indiva Ltd. announced a corporate update and raised its Q423 revenue guidance,” he noted. “The Company reported that it saw strong sell-through activity in its Pearls and No Future branded edible cannabis gummies. Management now expects Q423 sales to exceed $10M, up from prior guidance of a slight sequential improvement, and above our prior Q423 revenue estimate of $9.6M. We are very pleased to see the strong traction of Indiva’s products, highlighting the Company’s repeated success at innovating and manufacturing market leading edible products.”

In a research update January 4, Semple maintained his “Speculative Buy” rating on Indiva, but raised his price target from $0.13 to $0.15, implying a return of 50 per cent at the time of publication.

The analyst thinks NDVA will post Adjusted EBITDA of $2.0-million on revenue of $37.2-million in fiscal 2023. He expects those numbers will improve to Adjusted EBITDA of $4.9-million on a topline of $43.1-million the following year.

“We remind investors that we updated our valuation parameters for Indiva following the Company’s Q323 results (note here), including the introduction of a 25% haircut to our DCF valuation due to the risk still present in Indiva’s balance sheet and the Company’s liquidity,” the analyst said. “However, if Indiva continues to navigate through these risks over the next 12 months and delivers on our forecasted financial results, our DCF valuation suggests there is room for further potential upside to our price target,” Semple concluded.