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Wall Street Is Bearish after OrganiGram’s Q2 Results


Apr. 16 2020, Updated 10:34 a.m. ET

OrganiGram (NASDAQ:OGI) kept analysts’ hopes high in the cannabis sector when other cannabis stocks struggled. The company has posted impressive earning results for the last few quarters. However, the company’s second-quarter earnings were disappointing. The company missed analysts’ revenue estimates. OrganiGram also reported an EBITDA loss for the quarter. Analysts expected a profit in the second quarter. The disappointing results changed analysts’ opinions about the stock. Let’s take a look at what Wall Street said about the stock.

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Wall Street is bearish on OrganiGram

OrganiGram’s second-quarter results didn’t meet the expectations. To learn more, read OrganiGram Posted Its Q2 Earnings, Stock Fell 12%. Besides Aphria (NYSE:APHA), many analysts had high hopes from OrganiGram. Recently, Bank of America upgraded Aphria and OrganiGram stock due to more cannabis demand. However, the company’s second-quarter results forced many analysts to downgrade OrganiGram stock and cut the target price.

CIBC downgraded OrganiGram stock to “neutral” from “outperform.” The firm also cut the target price to 2.75 Canadian dollars from 5 Canadian dollars. Haywood Securities cut the target price to 4.75 Canadian dollars from 5.5 Canadian dollars. Meanwhile, PI Financial reduced the target price to 5.5 Canadian dollars from 7 Canadian dollars.

Canaccord Genuity reduced the target price to 5 Canadian dollars from 6.5 Canadian dollars. Eight Capital also cut the target price to 4 Canadian dollars from 7 Canadian dollars. Stifel FirstEnergy cut its target price on OrganiGram stock to 6 Canadian dollars from 10 Canadian dollars. Jefferies cut the target price for the stock trading on the NYSE to $3.6 from $4.2. The firm cut the target price for the stock trading at the Toronto Stock Exchange to 5 Canadian dollars from 5.5 Canadian dollars.

Surprisingly, amid the reductions and downgrades, AltaCorp Capital upgraded OrganiGram stock to “outperform” from “sector-perform.” However, the firm cut the target price to 4.1 Canadian dollars from 5.5 Canadian dollars.

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What do I think about the stock?

Analysts’ recommendations for OrganiGram stock remain the same after the earnings. Currently, 16 analysts still cover the stock. Among the analysts, eight recommend a “buy,” four recommend a “strong-buy,” and four recommend a “hold.” The average target price on the stock has fallen to 4.63 Canadian dollars from 5.8 Canadian dollars. The new target price represents an upside potential of 111%.

Meanwhile, many analysts cut the target price for Aphria stock. However, most of the analysts are bullish on the stock. They upgraded the stock after Aphria reported impressive third-quarter results. To learn more, read Aphria Reported Impressive Q3 Results, Beat Expectations.

Previously, I discussed why OrganiGram and Aphria are strong picks in the cannabis sector. I still think that both of the stocks are strong picks. Aphria continued to have an impressive performance. I think that OrganiGram will be able to bounce back in the coming quarter despite COVID-19. Both of the companies have maintained their balance sheet and cash position. OrganiGram continues to focus on Cannabis 2.0 products despite short-term challenges. The company’s strategies to handle the COVID-19 situation look impressive.

So far, OrganiGram stock has lost 21.5% in April. The stock closed 1.5% lower on Wednesday. Meanwhile, Aphria closed 3.5% higher. Hexo (TSE:HEXO) closed 1.3% higher, while Cronos Group (NASDAQ:CRON) closed with a loss of 2.1%. Aurora Cannabis (NYSE:ACB) is still trading lower after its reverse stock split decision. The stock closed 5.5% lower yesterday.

Read Will the Marijuana Industry Survive COVID-19? to learn more.


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