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Canaccord: DionyMed On Track For 'Strong' 2020

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Canaccord: DionyMed On Track For 'Strong' 2020
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The multistate vertically integrated cannabis brand and delivery company DionyMed Brands Inc (OTC: DYMEF) reported Friday with first-quarter results which fell short of expectations, but the company is set up for a "strong" 2020, according to Canaccord Genuity.

The Analyst

Bobby Burleson maintained a Speculative Buy rating on DionyMed's Canada-listed stock with an unchanged CA$6 ($4.46) price target.

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The Thesis

DionyMed reported revenue of CA$14.4 million and an EBITDA loss of CA$6.5 million in the first quarter, missing expectations of CA$19.3 million in revenue and a CA$4.8-million EBITDA loss, Burleson said in a Sunday note. (See his track record here.) 

Revenue would have been CA$19.4 million on a pro-forma basis if the figure had included around CA$5 million of products that were processed that the company could not reflect as revenue due to contract terms that are being amended, the analyst said.  

The earnings report also showed strong adoption of the Chill business, which is operating at a CA$10.3-million revenue run rate, he said. 

As DionyMed continues to grow its business, it should translate to a notable margin uptick for the direct-to-consumer business and the company as a whole, Burleson said. 

The DTC business should reach a run rate that would fully replace Eaze in 2020 at "much healthier" margins, the analyst said. 

The wholesale distribution business should see improvements in margins throughout 2019 and into 2020 as partnerships and the company's own brands take a greater share, according to Canaccord.

Price Action

DionyMed shares were down 13.7 percent at $1.48 at the time of publication Monday. 

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Posted-In: Analyst Color Cannabis Earnings News Penny Stocks Guidance Price Target Reiteration

 

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