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Organigram: Target Price and Ratings before Q4 Earnings

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Organigram (OGI) plans to report its results for Q4 of fiscal 2019 on November 25. Last week was disastrous for the cannabis sector. Investors expected upbeat results from Aurora Cannabis, Canopy Growth, and Cronos. However, earnings for these cannabis players disappointed.

Despite the turmoil in the cannabis industry since last week, Organigram stock has been soaring. Its stock closed with a gain of 12.6% yesterday. Let’s see how analysts’ price targets and ratings look for Organigram prior to its earnings release.

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What are analysts saying?

Last month, Jefferies cut the target price for Organigram to 8.20 Canadian dollars from 10.50 Canadian dollars and upgraded it to “hold” from “buy.” Additionally, PI Financial cut the target price to 7 Canadian dollars from 12 Canadian dollars with a “buy” rating.

In November, Altacorp Capital cut the target price to 6.50 Canadian dollars from 13.15 Canadian dollars. Canaccord Genuity cut the target price to 7 Canadian dollars from 8.50 Canadian dollars with a “speculative buy” rating.

Jason Mann, EdgeHill Partners’ chief investment officer, recently discussed the high valuations of cannabis stocks such as Organigram on BNN Bloomberg. To learn more, please read Why Jason Mann Wants to Bypass Organigram.

Latest price update for Organigram

The number of analysts covering Organigram stock has increased since its third-quarter results. The consensus price target for its stock fell to 8.23 Canadian dollars from 11.70 Canadian dollars prior to its earnings. This represents a fall of 29.6%. Its current revised price target means a potential upside of 169% over the next 12 months.

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Organigram’s peers’ earnings

Peer Canopy Growth (CGC) (WEED) reported its Q2 of fiscal 2020 results last week. Its revenue of 78.6 million Canadian dollars missed analysts’ estimates. The company also reported EBITDA of -155.7 million Canadian dollars. To learn more, please read Canopy Growth Stock Falls after Weak Q2 Earnings.

Furthermore, Cronos Group (CRON) also reported weaker third-quarter results last week. The company reported EBITDA of -23.93 million Canadian dollars. To learn more, please read Cronos Group’s Q3 Earnings: Good or Bad News?

Comparatively, Aurora Cannabis’s (ACB) results weren’t all bad news. Its revenue rose 153.57% YoY but missed analyst’s estimates. It also reported EBITDA of -39.67 million Canadian dollars. To learn more, please read Aurora Cannabis: Good or Bad News for Its Q1 Earnings?

Tracking the trend

Over the past 12-month period, Organigram’s stock has received an increase in coverage from analysts, driven by its strong fundaments.

Despite the turmoil in the cannabis industry, Organigram remains positive about its fourth quarter. Recently, it announced a corporate update. It expects 547% year-over-year growth in net revenue to $80.4 million. It also expects to report a positive EBITDA.

Notably, the number of analysts covering the stock increased from nine to 15 over this period. Additionally, the analysts’ “buy” recommendations also increased on the stock.  However, the price target for Organigram declined gradually over this period. The cannabis industry has faced many hurdles this year, compelling analysts to reduce the target prices for multiple cannabis stocks.

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Analysts’ ratings for Organigram

While OGI’s consensus price target has fallen since its third-quarter earnings, the consensus remains bullish on the stock. The overall “buy” ratings have increased for the stock.

Out of the 16 analysts covering the stock, four analysts gave it a “strong buy” and 10 gave “buy” ratings on the stock. The “strong buy” and “buy” ratings on the stock remain unchanged from October. However, two analysts currently have “hold” ratings on the stock. There were no “sell” ratings for OGI.

Meanwhile, Hexo (HEXO) has majority “hold” ratings and a target price of 4.02 Canadian dollars. Canopy Growth has majority “hold” ratings on its stock and a target price of 28.90 Canadian dollars.

Peer Aurora Cannabis (ACB) has a “hold” rating on its stock and a target price of 5.72 Canadian dollars. For more on ACB, please read Aurora Cannabis: Is This the Right Time to Invest?

Organigram and peers’ stock performance

In November, Organigram’s stock price has declined by 38.1%. Plus, cannabis ETFs also have been trading in the red. ACB has seen its worst trend since its earnings, and its stock is down 34.8% in November so far. Canopy Growth and Cronos Group’s stock prices have declined 23.2% and 18.3%, respectively.

For more marijuana-related news and updates, visit 420 Investor Daily.

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