OrganiGram: Analysts’ Target Price and Ratings


Sep. 26 2019, Published 10:57 a.m. ET

OrganiGram Holdings (OGI) stock has been under pressure since it reported its third-quarter earnings on July 15. As of Wednesday, the company was trading at 5.04 Canadian dollars, which implies a fall of 33.7% from July 15. In the third quarter, OrganiGram’s revenues and gross margins fell compared to the second quarter. The lower revenues and gross margins made investors’ skeptical, which made the stock price fall.

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Analysts’ ratings for OrganiGram

As of Wednesday, 13 analysts cover OrganiGram compared to 12 analysts on August 25. On Tuesday, CIBC initiated coverage on OrganiGram with an “outperformer” rating and a target price of 9.0 Canadian dollars. On September 5, Oppenheimer started covering the stock with a “perform” rating.

Despite the weak third-quarter performance, analysts maintained a bullish outlook for OrganiGram. Among the 13 analysts that cover OrganiGram, three recommend a “strong-buy,” nine recommend a “buy,” and one recommends a “hold.” Meanwhile, none of the analysts recommend a “sell.”

Now, we’ll see how analysts rate OrganiGram’s peers.

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OrganiGram’s target price

From the above graph, you can see that the consensus target price has increased since the beginning of this year. The higher consensus target price shows that analysts are confident about the company’s growth initiates. As of Wednesday, the consensus target price is 11.82 Canadian dollars compared to 11.74 Canadian dollars on August 25. Notably, the new target price represents an upside potential of 134.5% from the stock price on Wednesday.

On the same day, Aurora Cannabis, Canopy Growth, and Aphria were trading at a discount of 63.0%, 66.8%, and 103.5%, respectively, from their respective target prices.

YTD stock performance

Despite the recent decline in OrganiGram’s stock price, the company has returned 4.1% YTD (year-to-date). So far, the company has outperformed its peers this year. During the same period, Aurora Cannabis, Canopy Growth, and Aphria’s stock prices have fallen 6.6%, 10.7%, and 6.5%, respectively.

During its third-quarter earnings, OrganiGram’s management said that it has been preparing for the second phase of legalization in Canada. The company has hired TGS International to gain intelligence on the cannabis derivative market. Initially, OrganiGram plans to focus on vaporizer pens and edible products, which are the most popular cannabis derivative products. The company plans to introduce vape products in December. OrganiGram will likely introduce cannabis-infused chocolates and beverages early in 2020.

Other players

Several major cannabis players are gearing up for Cannabis 2.0 next month. Aurora Cannabis has been focusing on vapes and edible products. In a partnership with PAX Labs, the company plans to introduce a portfolio of vape products. Aurora Cannabis is also expanding its production facilities to meet the increased demand due to the second phase of legalization. The company’s production facilities, Aurora Sky and Aurora Air, will produce edible products. To learn about Aurora Cannabis’s initiatives, read Cannabis 2.0: Aurora Cannabis Gears Up for Edibles Market.

Canopy Growth plans to introduce its vape products later this year. To learn more, read Jim Cramer Discusses the Future of Canopy Growth.

Aphria partnered with PAX Labs to introduce PAX pods for medical and recreational use. The company expects the vapes and concentrates to gain 30% of the Canadian recreational market by 2021.

Cannabis legalization in the US will have a significant impact on the sector. To learn more, read Marijuana Legalization: South Dakota Does What Trump Said! and Marijuana Legalization Continues: Wisconsin Steps Up!


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