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Organigram Analyst Cuts Price Target, Lowers Sales Estimates Ahead Of Q1 Report

Organigram Analyst Cuts Price Target, Lowers Sales Estimates Ahead Of Q1 Report

Organigram Holdings Inc. (NASDAQ: OGI) shares lost 63.58% over the past 12 months. Cantor Fitzgerald lowered its price target Monday for the cannabis company ahead of its first-quarter report on Jan. 27.

The Organigram Analyst

Pablo Zuanic maintained an Overweight rating on Organigram and cut the price target from CA$13.30 ($10.25) to CA$9.50 ($7.32).

The Organigram Thesis

In order to mirror market share that's more in line with the August quarter than prior quarters, Cantor trimmed its sales estimates for Organigram, Zuanic said in a Monday note. (See his track record here.) 

The January and May quarters were not a true representation of the underlying movements considering the effects of price discounts and returns, the analyst said. 

The consensus estimates are high, Zuanic said, adding that Cantor is 5% below the Street on sales — and 40% below the conensus adjusted gross margin estimate. 

"That said, OGI remains one of the most cost-efficient operators in Canada, with a focused approach, and we continue to think the valuation is attractive (3x 1yF EV/Sales compared with most direct peers at 7-8x)." 

It will take a while for Organigram to regain credibility after the company's August quarter, the analyst said. 

Organigram experienced a significant drop to $16 million in net sales in the August quarter versus net sales of $25-27 million in the second and third quarters, he said, adding that “we expect minor improvements to $18Mn in the Nov Qtr.”

Organigram Price Action

Organigram shares were down 3.52% at $2.19 at the time of publication. 

Related Links:

Aurora Cannabis Analyst Lowers Price Target, Says Company Needs 'Greater Financial Discipline'

Organigram Receives Health Canada Licenses For Chocolate Production

Latest Ratings for OGI

Apr 2021CIBCDowngradesNeutralUnderperformer
Apr 2021BMO CapitalUpgradesUnderperformMarket Perform
Mar 2021BMO CapitalDowngradesMarket PerformUnderperform

View More Analyst Ratings for OGI
View the Latest Analyst Ratings


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