Decibel Cannabis is a buy, this analyst says

Haywood Capital Markets analyst Neal Gilmer maintained his “Buy” rating and $0.25 target price on Decibel Cannabis Company (Decibel Cannabis Company Stock Quote, Chart, News, Analysts, Financials TSXV:DB) in an Aug. 21 report, after the company posted stronger-than-expected second-quarter results driven by international sales and its AgMedica acquisition.

“Decibel reported very strong Q2/25 financial results representing significant growth over last year, in part due to the AgMedica acquisition,” Gilmer said. “Solid margins and cost containment also produced EBITDA above our forecast.”

Decibel is a Canadian licensed producer known for its premium Qwest and Qwest Reserve brands and its core brand, General Admission. It operates three facilities across the country for cultivation, production and manufacturing.

Q2 revenue was $29.8-million, up 35% year over year and above Haywood’s $28.7-million estimate. Adjusted gross margin was 49.4%, ahead of the 46.5% forecast. Adjusted EBITDA came in at $6.3-million, representing a 21.1% margin, compared with $4.4-million expected and up 60% from Q2 2024. Decibel generated $2.7-million in operating cash flow, $2.2-million in free cash flow, and $4.5-million in adjusted free cash flow, ending the quarter with $5.3-million in cash and $36.7-million in debt, with most maturities pushed out to 2027. The company also has a $7.5-million accordion facility that it does not currently intend to use.

“The company continues to improve the balance sheet, generating $2.2M in free cash flow in Q2 and $4.5M in adjusted free cash flow. Decibel reiterated guidance for 2025 to generate $20M in adjusted free cash flow,” Gilmer noted.

International markets were the main growth driver, with revenue of $6.1-million, up 176% sequentially. AgMedica contributed $5.4-million in revenue in the quarter, of which $4.7-million came from international sales. Domestic recreational sales also rose 7% year over year.

The company reaffirmed 2025 guidance of about $130-million in net revenue and $25-million in Adjusted EBITDA, with $20-million in adjusted free cash flow expected to further strengthen the balance sheet.

“While the Q2 financials came in better than our expectations, we have left our forward estimates relatively unchanged and remain slightly below management’s guidance. We remain confident in management’s guidance however, we know the timing of shipments can be uncertain at times,” Gilmer wrote.

“In our opinion, Decibel has demonstrated the quality of its brands by capturing strong market share relative to the peer group. As Decibel garners more awareness within the investor base, we believe the valuation will reflect this strong position in the market.”

Gilmer said that Decibel should do $23.6-million in Adjusted EBITDA on revenue of $121.2-million in fiscal 2025. He said those numbers will improve to $28.8-million on revenue of $146.8-million in fiscal 2026.

Disclosure: Nick Waddell owns shares of Decibel Cannabis

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