VEXT Science keeps buy rating at Ventum

Following the company’s fourth quarter results, Ventum Capital Markets analysts Andrew Semple has maintained his “Buy” rating on Vext Science (Vext Science Stock Quote, Chart, News, Analysts, Financials CSE:VEXT).

On March 31, VEXT reported its Q4 and fiscal 2024 results. In the fourth quarter, the company posted Adjusted EBITDA of $3.24-million on revenue of $10.2-million, a topline that was up 19.4%, year-over-year.

“2024 was a pivotal year for Vext, as we successfully executed our strategy and delivered strong growth despite a challenging consumer environment,” CEO Eric Offenberger said. “The launch of Ohio’s adult-use market marked an inflection point, and we are already seeing the benefits from our investments in the state, with Q4 2024 revenue growing 13% sequentially to $10.2 million. Our Jackson and Columbus retail locations, combined, delivered ~40% sequential growth in Q4, demonstrating the strength of the vertically integrated platform we have built. In Arizona, despite a 25% decline in statewide per-store sales, our team’s operational strength remained evident. We successfully drove retail traffic, preserved gross margins, and leveraged improved yields from our efficient Eloy cultivation facility, enabling us to sustain share in this challenging market. This balanced approach across both markets translated into solid financial performance for the quarter and full year, culminating in $3.3 million in positive cash flow from operations at year-end.”

Semple says this was a very good quarter for VEXT.

“Vext Science Inc. reported strong Q4/24 results,” he wrote. “Sales, gross margins, and EBITDA beat our estimates as the Company benefited from the first full quarter of Ohio adult-use sales and a seasonal recovery in the Arizona market. Cashflow generation was much better than forecast, resulting in a record quarterly FCF of $3.2M. Vext utilized this cash windfall to de-lever its balance sheet. Improving cash generation partially alleviates our prior concerns on the Company’s liquidity in 2025, and we now view Vext as well positioned to fund growth initiatives in 2025. We view the results positively.”

In a research update to clients March 31, Semple maintained his “Buy” rating and price target of $0.50 on VEXT, implying a return of 177.8% at the time of publication.

“We reiterate our BUY rating and price target of C$0.50/shr based on a DCF valuation of C$0.49/shr (prev. C$0.46/shr),” the analyst added. “Our DCF valuation utilizes a 15% discount rate and 22.5x terminal year FCF multiple. Our 2025 and 2026 forecasts declined due to updating our model for the timing of future Ohio store consolidation/openings and reducing our expectation for average sales-per-store contribution. This was more than offset by including four additional stores in Ohio in our forecasts (now eight stores total). We now include these stores due to improved clarity on regulatory approvals and permit timing of these stores (we previously gave Vext no credit for these stores). Our increased DCF value was also supported by better Q4/24 cashflow generation and a somewhat de-risked liquidity outlook ahead.”