Village Farms is a “significantly undervalued” stock, analyst says

Beacon Securities analyst Doug Cooper reiterated his “Buy” rating and US$8.00 target on Village Farms International (Village Farms International Stock Quote, Chart, News, Analysts, Financials NASDAQ:VFF), arguing that its international cannabis growth and expanding production capacity are not reflected in its valuation.

In an Oct. 20 report, Cooper noted that Village Farms trades at 4.4 times his fiscal 2027 EBITDA estimate, compared with a peer-group average of 7.9 times and 9.1 times for Aurora Cannabis.

“We believe shares of Village Farms are significantly undervalued,” Cooper said.

The analyst believes the company deserves a premium rather than a discount, citing its low production costs, strong international growth and capacity expansion in Canada and the Netherlands.

“The most important story in cannabis over the past few years has been the rise of Germany’s medical cannabis market,” he argued.

Germany reclassified medical cannabis from a narcotic to a regulated medicine in April 2024, allowing any physician to prescribe it. Cooper said the change has driven rapid demand growth, with most supply imported, predominantly from Canada.

German cannabis imports reached 67.6 tonnes in the first quarter of 2026, up 77% year-over-year.

“We believe Germany could still be in the very early stages of its growth cycle. If we compare to Florida, whose medical market is more mature, we can see that Germany can grow to over 3x its present size,” Cooper said. His analysis estimates Germany has about one million medical cannabis patients, representing 1.2% of its population, compared with 4% in Florida.

At similar participation levels, Germany could reach approximately 3.3 million patients, with annual cannabis consumption rising to nearly 669 tonnes from about 200 tonnes.

Cooper believes Village Farms is well positioned because suppliers to Germany must meet European Union Good Manufacturing Practice certification requirements.

Village Farms has approximately 2.2 million square feet of EU-GMP-certified greenhouse capacity, which Cooper said is the industry’s largest.

The company reported international cannabis revenue of approximately $34-million in its latest quarter, up 68% year-over-year.

Cooper also highlighted the company’s Netherlands operations, which generated US$3.35-million in quarterly revenue and are expanding production capacity fivefold.

In Canada, Village Farms is expanding cultivation at its Delta, B.C., complex, adding approximately 40 tonnes of annual capacity.

Cooper expects much of that production to serve Germany, where selling prices and margins are more attractive, while some will supply Canada’s adult-use market.

He said Village Farms generated a 24% EBITDA margin in its latest quarter, the highest among the companies in his comparison group. Cooper also pointed to consolidation activity as evidence of growing interest in international cannabis assets.

“If VFF is the belle of the ball in terms of international cannabis potential, others want a piece of the pie,” he said. He cited Curaleaf’s hostile takeover bid for Aurora Cannabis, which he believes is driven primarily by Aurora’s international operations. The offer values Aurora at approximately nine times fiscal 2027 EBITDA, more than double Village Farms’ multiple.

Cooper also highlighted Village Farms’ US$33-million net cash position and expects free cash flow to improve as major capital spending winds down.

His US$8.00 target is based on 10 times estimated EBITDA earning power once current capacity expansions reach their expected run rate in late 2027.

Cooper expects Village Farms to generate Adjusted EBITDA of US$54.3-million on revenue of US$241.2-million in fiscal 2026, improving to Adjusted EBITDA of US$67.8-million on revenue of US$289.1-million in fiscal 2027.

-30-