Beacon Securities analyst Doug Cooper continues to have positive vibes toward Vibe Growth Corp. (Vibe Growth Stock Quote, Chart, News, Analysts, Financials CSE:VIBE), maintaining his “Buy” rating and target price of C$2.60/share in an update to clients on Monday. Founded in 2011 and headquartered in Vancouver, VIBE Growth is a vertically-integrated cannabis organization featuring retail dispensaries, cannabis greenhouse cultivation, premium indoor cultivation, commercial distribution and transportation, e-commerce and home delivery and is the manufacturer of Hype Cannabis Co. marijuana products. Cooper’s latest analysis comes after VIBE released its second quarter financial results, which Cooper noted to be in line with expectations. VIBE reported revenue of $7.8 million (all reports in US dollars except where noted otherwise) for the quarter, marking a three per cent quarter-to-quarter improvement and a 37 per cent year-over-year increase. Cooper notes that 90 per cent of the revenue came from three VIBE stores within California: Sacramento, Stockton, and Redding, as those stores also experienced 18 per cent year-over-year same store sales growth. The company’s EBITDA for the quarter came in at $900,000, marking a seven per cent quarter-to-quarter improvement and a 58 per cent year-over-year increase. Overall, the company reported a consolidated EBITDA margin of 11.6 per cent to go with a consolidated gross margin of 32.5 per cent. Cooper said he is expecting those numbers to increase as future cultivation projects get up and running and has estimated that Vibe used about 50 per cent of its production in its own products. On August 19, the company officially announced the closing of its previously announced purchase agreement for the acquisition of a 10-acre parcel of land in Monterey County, California for 254,000 square feet of potential greenhouse cannabis cultivation at US$5.1 million. The company has also begun trading on the OTC Pink market under the VIBEF symbol, and will continue to trade on the Canadian Securities Exchange and the Frankfurt Exchange, with plans to apply to list its common shares on the OTCQX Best Market. "We are delighted to report another strong quarter and anticipate significantly more record Vibe high-THC cultivation output coming through our stores," said Mark Waldron, CEO of Vibe, in the company’s August 30 press release. "Our strong cash position has given us the ability to significantly ramp our revenues and margins with our California cultivation and retail expansion strategy. Closing on a 10 acre F40 zoned agricultural land parcel in Monterey, California in August, and the addition of our Sacramento indoor cultivation capacity - which is currently well underway - plus the opening of two new dispensaries in Ukiah and Salinas within the next eight weeks, puts Vibe in a terrific competitive position." "What makes Vibe unique in California is our strategic commitment to bringing branded, high-THC Vibe flower and products through our retail stores and distribution network. We are steadfast that the most sustainable, high-earnings growth in California comes from premium cultivation combined with a dynamic retail platform. That is Vibe's strategy, pure and simple," Waldron added. Cooper’s financial estimates show a company well positioned to continue growing, as he projects VIBE to reach $36.6 million in revenue for 2021, a projected 51.2 per cent year-over-year increase from 2020, before jumping up to a projected $55.4 million in 2022 for a projected 51.3 per cent year-over-year increase. After reporting a 10.7 per cent margin in 2020, Cooper projects VIBE’s adjusted EBITDA to climb over the next two years on account of scale relating to vertical integration, projecting $6.1 million and a 16.7 per cent margin for 2021 before jumping up to a projected $17.3 million and a 31.2 per cent margin in 2022. Cooper’s valuation data also paints VIBE in a positive light, as he projects the company’s EV/Sales multiple to drop from 1x in 2020 to 0.8x in 2021, then to 0.5x by 2022. Shifting margins also lead to Cooper projecting an improved EV/EBITDA multiple, forecasting a significant drop from 9.6x in 2020 to 4.6x in 2021, followed by another drop to 1.6x in 2022. The price-earnings multiple follows a similar trajectory, with Cooper forecasting a drop from 38.8x in 2020 to a projected 22.7x in 2021, then falling all the way to a projected 4.1x in 2022. Based on the second quarter results, Cooper believes VIBE is an attractive investment option going forward. “While the cannabis companies with the cheapest multiples seem to have one thing in common (ie. CA-based), we continue to believe it is unwarranted,” Cooper said. “VIBE has solid profitable assets, good growth potential and enough cash to fund such growth.” At press time, Cooper's C$2.60 target represented a projected one-year return of 420 per cent. Overall, VIBE’s stock price has dropped 13.3 per cent over the course of 2021, with its high point of C$1.38/share coming on April 6.