Is Organigram stock a buy? (August, 2024)

Following the company’s third quarter results, Haywood analyst Neal Gilmer has maintained his “Buy” rating on Organigram (Organigram Stock Quote, Chart, News, Analysts, Financials TSX:OGI).

On August 13, OGI reported its Q3, 2024 results. The company posted Adjusted EBITDA of $3.5-million on Net Revenue of $41.1-million, a topline that was up 25% year-over-year.

“We are pleased to report a strong third quarter, highlighted by a 25% year-over-year increase in net revenue, and a significant improvement in adjusted EBITDA”, CEO Beena Goldenberg said. “Our strategic investments and partnerships, both domestically and internationally, have positioned us for growth and diversification, particularly in the European market with our investment in Sanity Group. Furthermore, the preliminary results from our landmark PK study on our latest patent pending nanoemulsion technology demonstrate our ongoing commitment to innovation and expanding our product offerings. I continue to be very proud of our dedicated team for their hard work and contributions to these achievements.”

The analyst gave his take on the quarter.

“Organigram reported Q3/F24 results for the period ending June 30th, 2024. Net revenue was largely in-line with our expectations with notable growth in recreational sales year over year,” he wrote. “Gross margins improved compared to last quarter while a notable drop in SG&A helped drive EBITDA better than expectations.”

In a research update to clients August 13, Gilmer maintained his “Buy” rating and $3.00 price target on OGI, implying a return of 20% at the time of publication.

The analyst thinks OGI will post EBITDA of $6.5-million on revenue of $160.3-million in fiscal 2024. He expects those numbers will improve to EBITDA of $11.3-million on a topline of $189.6-million in fiscal 2025.

“Recently OGI further solidified its balance sheet at a notable premium to market and better positions it to execute on its growth strategy,” he added. “In an industry with limited access to capital we view an increased investment from a strategic partner positively, ahead of new product launches that should drive market share and revenue growth next year, while also insulating it from the challenging market with a strong cash position.”