Buy Decibel Cannabis for a double, this analyst says

Haywood Capital Markets analyst Neal Gilmer reiterated his “Buy” rating and $3.75 target on Decibel Cannabis Company (Decibel Cannabis Company Stock Quote, Chart, News, Analysts, Financials TSXV:DB), saying a $5-million share purchase offer from Ewing Morris could help attract greater institutional interest.

Gilmer noted that Toronto-based investment manager Ewing Morris has offered to acquire up to 2.6 million Decibel shares at $1.91 each, representing a 16.4% premium to the stock’s 20-day volume-weighted average price when the offer was announced. The all-cash offer – which is not a formal takeover bid – remains open until Nov. 6, unless extended, changed or withdrawn. If oversubscribed, shares will be purchased on a pro rata basis.

In his Oct. 21 update, Gilmer said the transaction provides shareholders with an opportunity to sell larger positions at a premium, particularly given Decibel’s limited trading liquidity.

“In our opinion, Decibel has demonstrated the quality of its brands by capturing market share relative to the peer group,” he said. “The Company’s push into the international segment has driven revenue growth and is expected to continue this year.”

The company averaged approximately 44,700 shares traded daily over the 20 trading days ended Oct. 16. The proposed purchase represents about 59 trading days of average volume.

“Ewing Morris cited prolonged cannabis sector underperformance and limited institutional interest in smaller issuers as key factors behind the offer,” Gilmer said. “The firm believes an increased institutional presence could provide greater stability to the company’s shareholder base, a view we generally share.”

Gilmer said the willingness of an institutional investor to pay a premium for Decibel shares reinforces his positive outlook on the business. He also highlighted the company’s valuation, with Decibel trading at 3.1 times estimated 2027 EV/EBITDA, compared with 5.1 times for its peer group.

Gilmer believes Decibel’s growing international cannabis business and market share gains support a higher valuation.

“In our opinion, Decibel has demonstrated the quality of its brands by capturing market share relative to the peer group,” he said. “The Company’s push into the international segment has driven revenue growth and is expected to continue this year.”

Gilmer said greater awareness among institutional investors could help narrow the company’s valuation discount. “As Decibel garners more awareness within the investor base and amongst institutional investors, we believe the valuation will reflect this strong position in the market,” he said.

His $3.75 target is based on 1.3 times estimated fiscal 2027 revenue, discounted at 15%.

Gilmer expects Decibel to generate Adjusted EBITDA of $30.7-million on revenue of $137.4-million in fiscal 2026, improving to Adjusted EBITDA of $35.4-million on revenue of $155.7-million in fiscal 2027.

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