The stock has been sagging but Beacon Securities analyst Russell Stanley continues to like the look of US cannabis name Vext Science (Vext Science Stock Quote, Charts, News, Analysts, Financials CSE:VEXT). Ahead of third quarter earnings from Vext due on Thursday, Stanley delivered an update to clients on the company on Monday where he reiterated a “Buy” rating, saying the stock is currently trading at a marked discount to its peer group. Vext, which has THC products under the Vapen brand and hemp-based products under the Pure Touch Botanicals brand, is vertically integrated in the state of Arizona, with two dispensaries and products sold in most of the state’s dispensaries. The company is also developing assets in Ohio. Stanley said Vext is traditionally one of the top-tier EBITDA and cash flow margin players in the US pot market, with the analyst calling for adjusted EBITDA margins of 45 per cent for the upcoming Q3 and cash from operations (CFO) margins of 16 per cent. On revenue, Stanley is forecasting $8.9 million and on adjusted EBITDA he’s calling for $4.8 million. The consensus forecast is for $8.5 million in revenue and $4.1 million in revenue. (All figures in US dollars except where noted otherwise.) “We continue to view VEXT, and particularly its operations in Arizona, as a very worthy acquisition target given their strong margin track record, combined with the fact that Arizona is one of few limited license states that major/mid-sized operators can continue to acquire assets in (they have already maxed out their license positions in many other markets),” Stanley wrote. Last week, Vext announced it had refinanced $4.4 million in ten per cent secured debt otherwise due to mature at the end of December, replacing that with $4.6 million in principal of 11.25 secured debt maturing in December 2027. Stanley said the refinancing gives improved flexibility to the company’s balance sheet. Meanwhile in Ohio, Vext is starting cultivation at its joint venture facility with a first harvest expecting in the first quarter next year. Stanley said Vext is likely to complete the acquisition of an operating dispensary in the state also in early 2023. Vext’s share price started dropping in early 2021 with the rest of the cannabis space, while year-to-date, the stock is currently down about 60 per cent. But Stanley sees a projected 12-month upside of 782 per cent, reiterating with his update a target price on VEXT of C$2.25 per share. “VEXT now trades at just 2.0x our F2023 adjusted EBITDA forecast. This represents a 73 per cent discount to the 7.4x average at which CSE-listed US operators trade. The stock also trades at just 2.3x last quarter’s EBITDA annualized, making it one of the most attractively valued stocks in the space on that basis,” he said.