Simply Better Brands has a potential blockbuster in TRUBAR, Clarus says

A single product could power Simply Better Brands (Simply Better Brands Stock Quote, Chart, News, Analysts, Financials TSXV:SBBC) to much greater heights, says Clarus analyst Noel Atkinson.

In a February 20 report to clients, Atkinson reiterated his “Speculative Buy” rating and one-year price target of $1.25 on SBBC, implying a return of 297 per cent at the time of publication.

The analyst says TRUBAR may be on the verge of becoming a household name.

“We estimate TRUBAR protein bar revenues grew +157% Y/o/Y to US$27.2MM in 2023e, thanks to strong sales through U.S. Costco stores and new listings in several major retail chains. For 2024 we project 65%+ growth in TRUBAR sales to US$45.0MM, and +59% growth in 2025e to US$75.0MM. We fully expect TRUBAR to reach a run-rate of US$100MM/year of revenues by early 2026e. Thanks to stellar consumer response to the brand, and the addition of Acosta as a national sales agency, the funnel of new retail listings is large and growing.

Atkinson thinks SBBC will post an Adjusted EBITDA loss of $3.3-million on revenue of $84.7-million in fiscal 2023. He expects those numbers will improve to Adjusted EBITDA of positive $1.4-million on a topline of $88.8-million in fiscal 2024. In fiscal 2025 the analyst thinks the company will post Adjusted EBITDA of $5.2-million on revenue of $115.0-million.

“TRUBAR today is worth C$1.25 per share, in our opinion. Our target price of C$1.25 per share (unchanged) is now equal to 2x EV/2024e TRUBAR revenues,” the analyst added. “This would reflect +300% return on the current share price. We view all other SBBC brands as non-core and expect them to be stabilized for breakeven cash flow (PureKana) or sold/shuttered. Given TRUBAR’s spectacular growth rate over the past few years and the pipeline of new U.S. retail distribution, we expect SBBC to focus working capital and corporate mindshare on maximizing TRUBAR’s growth.”