Supreme Cannabis: Analysts’ Target Price and Ratings


Sep. 25 2019, Updated 1:56 p.m. ET

Supreme Cannabis (FIRE) reported its fourth-quarter earnings on September 17. The company reported revenue growth of 90% from its third-quarter revenues. In addition, Supreme Cannabis reported a positive EBITDA for the first time of 3.2 million Canadian dollars. For fiscal 2020, the company’s management set the revenue guidance at 150 million–180 million Canadian dollars. During the same period, management expects the EBITDA to be positive. Supreme Cannabis stock has fallen 5.1% since September 17. Overall, weakness in the cannabis sector likely caused the stock price to fall.

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Analysts’ rating for Supreme Cannabis

On Tuesday, CIBC initiated coverage on Supreme Cannabis with an “outperformer” rating. Notably, the investment firm gave the stock a 12-month target price of 2.0 Canadian dollars. The target price implies a return potential of 52.7% from the stock price of 1.31 on Tuesday.

Analysts maintained a bullish outlook on Supreme Cannabis. Among the seven analysts that cover the stock, three recommend a “strong-buy,” three recommend a “buy,” and one recommends a “hold” rating. However, none of the analysts recommend a “sell” rating.

Now, we’ll discuss how analysts rate Supreme Cannabis’s peers:

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Supreme Cannabis’s target price

From the above graph, you can see that the consensus target price has fallen gradually since the beginning of 2019. In January, analysts had a consensus target price of 3.36 Canadian dollars. The consensus target price has fallen to 2.83 Canadian dollars as of Tuesday. Notably, the new consensus target price implies an upward potential of 115.9% over the next 12 months.

On Tuesday, Aurora Cannabis, Canopy Growth, and Aphria were trading at a discount of 64.1%, 71.5%, and 97.9%, respectively, from their respective target prices.

Stock performance

So far, Supreme Cannabis has lost 0.8% of its stock values year-to-date as of Tuesday. The cannabis sector is weak due to regulatory scandals. Also, the company’s stock price fell due to scandals. However, Supreme Cannabis is preparing for the second phase of legalization in Canada. The second phase of legalization will likely legalize the sale of derived cannabis products like vapes, infused beverages, and edibles. In June, Supreme Cannabis agreed to a partnership with Pax Labs to supply cannabis pods for its PAX Era vaporizer in Canada. The company wants to expand its CBD business. In July, Supreme Cannabis completed its acquisition of Blissco Cannabis. The acquisition will likely boost the company’s global CBD business.

In comparison, Aurora Cannabis, Canopy Growth, and Aphria’s stock prices fell 7.2%, 13.2%, and 3.8%, respectively.

Aurora Cannabis stock has faced downward pressure since it reported lower-than-expected fourth-quarter revenues on September 11. Canopy Growth stock fell due to its dismal first-quarter earnings. However, Aphria reported impressive fourth-quarter results on August 1.


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