WeedMD: Canaccord Reiterates Price Target After Earnings

WeedMD (TSXV: WMD) reported their first-quarter financials of 2021 on June 29th. The company reported revenues of $10.3 million, an 85% quarter-over-quarter increase. The company reported adjusted EBITDA of ($432) thousand, primarily due to having better bottom-line losses.

WeedMD currently only has two analysts who cover the company, with a weighted 12-month price target of C$0.45, or a 58% upside. Out of the two analysts, one has a strong buy rating while the other has a hold rating.

Canaccord Genuity reiterated their street-high price target of C$0.60 while also reiterating their speculative buy rating. Shaan Mir, their analyst, says that this quarter showed, “an impressive sequential improvement on both the company’s medical and adult-use platforms after an FY20 marked with flat-to-declining top-line performance.”

Mir says that the company’s revenue growth mainly came from adding additional SKUs to provide a more diverse product set, alongside more spending on sales and marketing. He writes, “the company saw strength in both its direct-to-patient (medical) and adult-use offerings as a result of increased distribution in the quarter.” Some specifics Mir points out, Color gained popularity in Quebec, becoming one of its top sellers, while it is also now in roughly 75% of the Ontario dispensaries.

Medical sales were up 125% quarter over quarter, primarily due to an increased patient adoption while adding an additional LUNA local. Mir makes note that WeedMD revenues did not go the same way of peers, where other LP’s had seen declining sales due to the regulators slowing their purchase orders down. He writes that this suggests “that the company has successfully pulled market share from other LPs in the reported quarter — offering further validation for WMD’s recreational platform.”

For the EBITDA, the companies ($432) thousand came in well below Canaccord’s ($2.2) million estimate primarily due to cost optimizations, which included surrounding office and administration expenses getting slashed. SG&A came in at $6 million as compared to the $11 million of the previous quarter.

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.

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