The stock is down plenty in recent months but ATB Capital Markets analyst Frederico Gomes still sees value in The Valens Company (The Valens Company Stock Quote, Chart, News, Analysts, Financials TSX:VLNS). Gomes maintained his \u201cOutperform\u201d rating but lowered his target price to $3.75\/share from $4.25\/share for a potential return of 81 per cent in an update to clients on Thursday. The Valens Company engages in the development and manufacturing of cannabinoid based products under Health Canada guidelines in the cannabis operations (extraction, post processing and white label manufacturing under standard processing and cultivation licenses) and analytical testing segments. Gomes\u2019 latest analysis comes after The Valens Company released its financial results for the third quarter of 2021, which Gomes noted to be in line with expectations. \u201cValens is undergoing strategic changes as it moves into the CBD market in the US and branded products in Canada,\u201d Gomes said. \u201cWith the closing of the Green Roads acquisition and the Citizen Stash acquisition expected to close in Q4\/FY21e, we believe that Valens has the elements in place to accelerate growth and drive to profitability.\u201d The company\u2019s financial results were headlined by revenue of $21 million, which came in slightly ahead of the ATB projection of $20.5 million and the consensus projection of $20.7 million, with net sales up 12 per cent quarter-to-quarter thanks to sales from American cannabis producer Green Roads, which accounted for $4.7 million in sales; Gomes notes that its absence would have yielded a 13 per cent drop in sales with lower business to business sales as the company aims to move away from smaller contracts. Meanwhile, the company\u2019s EBITDA came in at a loss of $6.2 million, which was worse than the consensus expectation of a $4.2 million loss but still beat the ATB projection of a $7.2 million loss. \u201cWith our operational platform largely built and a critical mass of provincial listings now in place, our focus has shifted to operational efficiencies, implementation of automation initiatives and volume growth to drive margin improvement and positive EBITDA in future quarters,\u201d said Tyler Robson, Chief Executive Officer, Co-Founder and Chair of The Valens Company in the company\u2019s October 13 press release. \u201cDuring the third quarter, we strategically transitioned away from smaller, underperforming B2B partners resulting in a 29 per cent decrease in B2B LP sales revenue quarter over quarter. We have instead taken a fewer, bigger, better approach and focused on building deeper relationships with larger licensed producer partners to drive efficiencies and profitable growth," Robson said. Gomes said Valens\u2019 market share has been trending upward in recent months, eclipsing 1.5 per cent in September after breaking one per cent for the first time in June. The company\u2019s most significant positive market share comes from its line of beverages, which accounts for over eight per cent of the national market share in that category. With the company\u2019s approach shifting toward bigger contracts and an increased focus on business to consumer sales, Gomes has modified his overall financial projections, lowering his 2021 revenue estimate to $82.9 million from $85.2 million, which would come in below the $83.8 million reported in 2020. Gomes also lowered his estimates for 2022 from $220.4 million to $149.2 million, as well as 2023\u2019s estimate from $278.4 million to $205.3 million. Meanwhile, with a projection of positive quarterly EBITDA in place by the final quarter of 2022, Gomes also modified his annual EBITDA projections to a $20.1 million loss in 2021 (previously $11.1 million), a $14.6 million loss in 2022 (previously a $36.6 million profit with 16.6 per cent EBITDA margin) before turning positive in 2023 at $17.4 million (previously $56 million) to produce an EBITDA margin of 8.5 per cent, driven by improving gross margins and a higher sales base conducive to operating leverage. Gomes notes a number of significant drivers in the company\u2019s potential growth for 2022, including a 37 per cent increase in provincial listings in the most recent quarter, the growth of cannabis markets in both Canada and the United States, and improvements to operating efficiency and supply chain integration. Overall, Gomes believes 2022 will mark a significant year for The Valens Company from a financial perspective. \u201cIn the US, we believe that the long-term outlook for the US CBD market is compelling, offering growth opportunities and optionality in the event of favorable regulatory developments in the CBD and THC markets,\u201d Gomes said. \u201cAs Valens integrates its supply chain and drives operational efficiencies, we believe that margins will gradually expand.\u201d Overall, The Valens Company\u2019s stock price has risen by 14.6 per cent over the course of the year, reaching a high point of $4.00\/share on May 10.