Organigram Has Analysts Confident ahead of Q1 Earnings


Nov. 20 2020, Updated 11:14 a.m. ET

Organigram (NASDAQ:OGI) is set to report its fiscal 2020 first-quarter earnings on January 14. The company’s fiscal 2019 fourth-quarter results were stable. However, the overall outlook of the cannabis industry affected it as well. Let’s take a look at how analysts feel about the stock ahead of its first-quarter earnings release.

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Analysts cut Organigram’s target price

On January 2, Jefferies cut its target price for Organigram stock to $3.8 from $6.2. Haywood Securities also reduced its target price to 6.5 Canadian dollars from 7.5 Canadian dollars. The reduction marked the second time Haywood Securities had reduced OGI’s target. The company cut its price to 7.5 Canadian dollars from 8 Canadian dollars in December.

OGI’s average target price is now down to 6.84 Canadian dollars compared to 7.41 Canadian dollars in December. This average target price has fallen 16.8% since before its fourth-quarter earnings release. The new target price represents potential growth of 155% for Organigram. Its stock closed at 2.68 Canadian dollars on January 7.

Analysts’ expectations for Organigram’s first quarter

Analysts expect Organigram’s first-quarter revenue to rise 63% YoY (year-over-year) to 20.3 million Canadian dollars. Additionally, its first-quarter EBITDA could be around 0.4 million Canadian dollars. Analysts also expect OGI’s revenue to fall 4.0% YoY to 25.8 million Canadian dollars in the second quarter of fiscal 2020. Its third-quarter revenue could rise 34.1% to 33.2 million Canadian dollars, and its fourth-quarter revenue could be around 41.3 million Canadian dollars. Furthermore, for fiscal 2020, analysts expect Organigram’s revenue to rise 62.6% to 130.8 million Canadian dollars.

Recently, I talked about how Raymond James feels that OGI is a good stock. In December, Organigram received 16 cultivation licenses from Health Canada for the production of chocolates, which could increase its production capacity.

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Peers’ earnings

The cannabis sector’s earnings season has started. While the big players disappointed last year with their results, 2020 could bring good news. If it’s successful, Cannabis 2.0 could be advantageous for the industry. HEXO (TSE:HEXO) reported disappointing results again last month. Its fiscal 2020 first-quarter revenue missed analysts’ estimates. Also, its EBITDA for the quarter came in at around -24 million Canadian dollars, reflecting the struggles it faced last year.

KushCo Holdings (OTCMKTS:KSHB) is set to report its fiscal 2020 first-quarter results today after the market closes. Its revenue could show growth of 68.6% YoY. Canopy Growth (NYSE:CGC) (TSE:WEED) is scheduled to report its fiscal 2020 third-quarter results on February 14.

Analyst rating changes for OGI

Analysts’ recommendations for Organigram stock haven’t changed since we last discussed them in December. The overall view remains bullish, with eight out of 15 analysts recommending “buys” on the stock. No analysts recommend “sells” on OGI.

Meanwhile, peers HEXO and CGC both have mostly “hold” ratings from analysts. KushCo Holdings also has mostly “buy” ratings.

Cannabis stocks didn’t do well in 2019. Organigram fell 68.6% in the year, while Canopy fell 21.5%. HEXO fell 69.7%, and KushCo fell 72% in 2019. As of January 7, Organigram is down 15.9%, while CGC is down 6.1%. HEXO has fallen 13.8%, and KushCo is down 3.6% year-to-date.

Investors and analysts are waiting to see how fiscal 2020 turns out for the cannabis industry. Choosing the right cannabis stocks requires research and analysis of company fundamentals. We discuss how investors can choose to invest in the sector in Cannabis Investment: How to Buy ACB, CGC, and Other Cannabis Stocks.

Stay with us to find out how Organigram and other cannabis players perform this year.


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