Buy this pot stock for big returns, analyst says

Haywood analyst Neal Gilmer says Organigram Holdings (Organigram Stock Quote, Chart, News, Analysts, Financials TSX:OGI) has established a global cannabis platform through its acquisition of Sanity Group GmbH, maintaining a “Buy” rating and $3.25 price target.

“The acquisition establishes Organigram as one of the top cannabis companies in Germany and provides the Company with a vertically integrated European hub from which to capitalize on the rapidly growing international cannabis opportunity,” Gilmer said in his April 23 report.

Gilmer said the deal strengthens Organigram’s position by adding scale in Germany to its existing leadership in Canada, giving the company exposure to what he described as the world’s two largest federally legal cannabis markets. Sanity generated €60-million in revenue in 2025, including €19-million in the fourth quarter, with positive full-year EBITDA and gross margin improving to 47% from 15% in 2023.

The upfront purchase price was €107.3-million, made up of €78.0-million in cash and €29.3-million in shares, or 15,784,423 Organigram shares issued at C$3.00 each. Sanity is also eligible for up to €113.8-million in earnout consideration tied to financial performance through April 1, 2027, including up to €20.0-million in cash and up to €93.8-million in shares, with share pricing subject to a $3.00 floor and $4.00 cap.

To fund the transaction, Organigram closed a $65.2-million private placement with BAT and secured up to $60-million in senior credit facilities from ATB Financial. The ATB package includes a $20-million non-revolving term loan drawn at closing, a $30-million revolving facility and a $10-million operating facility, all maturing April 14, 2029. Gilmer noted that part of the cash consideration also came from Organigram’s Jupiter strategic investment pool, marking the final use of that capital.

“We view this as a strategic transaction that meaningfully extends Organigram’s reach beyond Canada,” Gilmer said.

Gilmer raised his forward estimates to reflect the acquisition, now forecasting fiscal 2026 revenue of $346.1-million and Adjusted EBITDA of $28.7-million, including five months of contribution from Sanity. For fiscal 2027, he forecasts revenue of $451.6-million and Adjusted EBITDA of $42.6-million.

The analyst maintained his $3.25 target based on 1.7x his fiscal 2027 EV/Revenue estimate, discounted by 15%.

“OGI further solidified its balance sheet at a notable premium to market which better positions the company to execute on its growth strategy,” Gilmer said. He added that stronger backing from a strategic partner should help support new product launches, market share gains and revenue growth while also giving the company added protection in a difficult capital environment.

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