On Friday, Raymond James reiterated Organigram Holdings (TSX: OGI) (NASDAQ: OGI)‘ market perform rating while downgrading their 12-month price target to C$3.00 from C$5.00. Rahul Sarugaser, Raymond James’ cannabis analyst headlines, “4Q20 Preview: Lowering TP to $3 on Flat Revenue, Adult-Use Mkt Share Decline.”
Sarugaser says that Organigram’s Q2 market share was roughly 6%, and during Q3, it came in at approximately 4%. The overall Canadian cannabis market has grown 75% year-to-date. He attributes this loss due to, “COVID-19 oriented logistical challenges causing OGI to miss the significant windfall engendered by large-format, deep value cannabis offerings in early and mid-2020.”
They estimate adult-use cannabis revenue to come in flat quarter over quarter at $15.6 million. He expects total revenue of $18.9 million, as they forecast that Organigram already booked one third of the total $2.4 million in relation to their deal with Canndoc.
Although the third-quarter numbers might be wrong, Sarugaser says that since the launch of Organigrams RE:MIX nanoemulsification technology and OGI’s reinvestment in Hyasynth Bio, it makes them believe their, “innovation engine is back up and running after a period of pandemic dampened activity. We believe is one of this company’s core strengths, and view this resurfacing with optimism as OGI moves forward.”
He also mentions that during the fourth quarter, Organigram launched “some key additions to its deep value line,” which includes SHRED, their high potency, pre-ground flower that sells for $4 per gram, which makes it the lowest-cost cannabis at the Ontario Cannabis Store.
Notably, Raymond James’ price target remains one of the higher targets among peers for Organigram Holdings, whom in July saw numerous downgrades following less than stellar results.
Information for this briefing was found via Sedar, Refinitiv and Organigram Holdings. 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.