What Do Analysts Think About OrganiGram in December?


Dec. 17 2019, Updated 12:24 p.m. ET

OrganiGram (OGI) reported its fourth-quarter fiscal 2019 results on November 25. The company showed stable revenue growth despite the turmoil in the cannabis industry. OrganiGram’s stock is up 2.3% since its earnings. Let’s see what analysts have to say about OrganiGram’s stock.

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What are analysts saying about OrganiGram?

After OrganiGram reported earnings, Haywood cut the price target to 7.5 Canadian dollars from 8 Canadian dollars. Additionally, Cormark Securities cut the target price to 4.5 Canadian dollars from 10 Canadian dollars.

The consensus target price for the stock took a hit after the results report. It’s down to 7.41 Canadian dollars from its level of 8.23 Canadian dollars before earnings. This is a fall of 10%. However, the new target price is 121% higher than OGI’s current trading price. On December 16, it closed at 2.5 Canadian dollars.

OGI’s performance in the fourth quarter

OrganiGram grew net revenue by 411% year-over-year to 16.2 million Canadian dollars. For the full fiscal year 2019, its revenue rose by 547% year-over-year to 80.4 million Canadian dollars. The company also reported a positive EBITDA of 19.9 million Canadian dollars for the full fiscal year 2019. However, for the fourth quarter, it reported a negative EBITDA of 7.9 million Canadian dollars. See OrganiGram’s Disappointing Q4 Earnings: Hope for Investors? to learn more about OGI’s results.

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Peers’ earnings

On December 16, Hexo (HEXO) reported its first-quarter fiscal 2020 results. HEXO missed analysts’ revenue estimates for the quarter. However, year-over-year revenue grew by 154.4% to 5.7 million Canadian dollars. Furthermore, Hexo reported a negative EBITDA of 24.6 million Canadian dollars. Read HEXO Stock Falls after Weak Q1 Earnings to learn more about Hexo’s results.

Peer companies Canopy Growth (CGC) (TSE:WEED), Cronos (CRON), and Aurora Cannabis (ACB) disappointed with their results last month.

Analyst ratings

While analysts reduced OGI’s consensus target price, they remain bullish on the stock. Currently, 15 analysts cover the stock compared to 16 before the fourth-quarter earnings results. Of the 15, four analysts have a “strong-buy” rating on OrganiGram’s stock while eight have a “buy” rating. Also, three analysts now rate the stock a “hold.”

Meanwhile, analysts have a majority “hold” rating for Hexo after its earnings results. The target price for Hexo is now set at 3.3 Canadian dollars. Additionally, analysts have a majority “hold” rating for peer Canopy Growth stock. It has a target price of $21.7. To learn more about Canopy’s plans, take a look at What’s Canopy Growth Strategy for Growth?

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 What else is happening with OrganiGram?

On December 4, OrganiGram announced an at-the-market equity program. According to the press release, under the conditions of the program, OGI can issue up to 55 million Canadian dollars’ worth of shares from the treasury to the public. To learn more about this, take a look at Why OrganiGram’s Recent Equity Program Is Bad News.

OGI also announced last week that it had received Health Canada’s licensing approval for 16 additional cultivation rooms.

Previously, we also discussed the views of Jason Mann, EdgeHill Partners’ chief investment officer, on the high valuations of marijuana stocks, including OGI stock.

OrganiGram’s and peers’ stock in December

In December, OrganiGram’s stock has declined by 4.8%. Meanwhile, ACB, CGC, HEXO, and CRON stock have gained 1.6%, 9.5%, 0.46%, and 3.8%, respectively, in December. Year-to-date, OGI stock has lost 67%.

To get more cannabis-related news, visit 420 Investor Daily.


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