Canaccord upgraded Greenlane Renewables (TSXV: GRN) from C$1.60 to C$2.75 and reiterated their speculative buy rating on the company earlier this week. This price target raise comes after positive sector tailwinds, with Canaccord’s analyst Yuri Lynk commenting, “We are increasing our target price to reflect the recent valuation expansion of companies in the broader sustainability sector, and especially the renewable gas sub-sector.” He also says that they view Greenlane as a pure-play for global adoption of renewable natural gas.
Greenlane is currently up roughly 3% in early morning trading. The stock is up more than 400% since October 1, and reached a 52 week high of C$2.75 on December 29th.
Greenlane currently has six analysts covering the company with a weighted 12-month price target of C$2.05. This is up from the average at the start of December, which was C$1.60. Three analysts have strong buy ratings, while the other three have buy ratings.
Lynk expects backlog to post a solid 189% year over year growth for the fourth quarter. This will set up Greenlane to break even for the year, which is a crucial milestone, Lynk says.
Lynk then comments that Greenlane will solidify their market-leading position with roughly C$49 million in new contract wins for 2020. With the $10 million system supply contract announced on December 3rd, the companies backlog has increased by 361% year over year to C$44 million.
The next thing Lynk addresses is that Greenlane is improving its balance sheet. During December, Greenlane announced they received $4.5 million in warrant proceeds. The company has another $4 million of in-the-money warrants that are set to expire next month and $6 million worth of warrants set to expire in June 2021. Greenlane had roughly $6 million in cash on hand as of the third quarter of 2020, with $6 million of debt due June 30th, 2021.
Lynk ends the note by saying, “Greenlane trades at 4.8x EV/Sales (2021E), below the peer group at 5.6x. We believe Greenlane deserves to trade in line with the peer group.”
Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.