Research Capital analyst Andre Greg McLeish reiterated a “Buy” rating and $3.50 price target on Cannara Biotech (Cannara Stock Quote, Chart, News, Analysts, Financials TSXV:LOVE) in a Feb. 4 special update, following the company’s recently completed strategic financing and progress toward a TSX uplisting.
Cannara is a Canadian licensed producer of premium cannabis headquartered in Quebec. It is the largest cannabis producer in the province and the fourth-largest in Canada by facility footprint.
McLeish said the $6.3-million non-brokered private placement introduces only modest dilution and does not alter his valuation or core investment thesis. He noted the financing strengthens Cannara’s balance sheet, improves liquidity and should deliver incremental interest expense savings that partially offset the dilution. The target price remains based on an 8.0x EV/EBITDA multiple applied to his fiscal 2027 EBITDA estimate, which he continues to view as appropriate given Cannara’s low-cost Quebec production base, expanding exposure to higher-margin product categories and improving free cash flow profile.
On Feb. 4, Cannara announced a $6.3-million strategic private placement with Phoenician Capital LLC, which subscribed for 3.0 million common shares at $2.10 per share, representing an approximate 16% premium to the prior close. Proceeds are expected to be used for working capital and strategic investments, including continued capital spending at the Valleyfield facility.
McLeish said the premium pricing provides external validation of Cannara’s operating trajectory, while dilution remains manageable at roughly 3.1%, taking pro forma shares outstanding to about 98.8 million. A concurrent secondary sale of 333,333 shares by CEO Zohar Krivorot was described as non-dilutive, with no proceeds to the company.
McLeish also highlighted Cannara’s conditional approval to uplist from the TSX Venture Exchange to the Toronto Stock Exchange under the symbol “LOVE,” which he said should enhance liquidity, visibility and institutional access once final listing requirements are met.
Operationally, McLeish pointed to the ongoing post-harvest and processing expansion at Valleyfield as a clear path to incremental margin upside. With cultivation capacity already supporting roughly 50,000 kilograms of annualized output, the new processing centre is designed to remove a key throughput bottleneck, increase internalization of post-harvest activities and support higher-margin downstream manufacturing. The project, funded through a $10-million committed capex facility, remains on budget and on schedule for fiscal 2026, in his view.
McLeish said Cannara should generate $36.5-million in Adjusted EBITDA on revenue of $127.4-million in fiscal 2026, improving to $41.0-million in Adjusted EBITDA on revenue of $141.9-million in fiscal 2027.
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