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Cantor Initiates Neutral Coverage On Village Farms International, Says Its Entry 'Into Other Segments Makes Sense'

Cantor Initiates Neutral Coverage On Village Farms International, Says Its Entry 'Into Other Segments Makes Sense'

Village Farms International (NASDAQ: VFF) shares gained 390% over the last 12 months, and year-to-date the stock is up 42.44%.

The Analyst: Cantor Fitzgerald’s Pablo Zuanic initiated coverage of Village Farms with a Neutral rating and a price target of $20.

The Thesis: Back in November, Village Farms completed its acquisition of Pure Sunfarms, which has a 3% share of the branded recreation market, as per its third-quarter data. “The company’s flower product has garnered a ~14% on-line share in ON, given its mix of high-potency, quality, and value,” Zuanic writes.

The company is trying to achieve the same in brick-and-mortar stores across other provinces, and with other products.

Zuanic added that thanks to Village’s low-costs and methodical approach, the company had 25% EBITDA margins for the cannabis unit, which is the best result in Canada and place the company among a small bunch of cannabis companies with positive EBITDA in the Canadian cannabis sector.

“If we assign zero value to the non-Canadian cannabis assets, we note that the stock trades well above the peer group, despite its small size,” Zuanic noted.

“There is nothing wrong with pursuing a value strategy, in our view; VFF has succeeded with pretty much a single brand and single format strategy so far,” the analyst said, adding it could be questioned if this is a “sustainable strategy.”

“In this sense, the entry into other segments makes sense, even though the company remains focused on the low end of the market.”

VFF Price Action: Village Farms shares were 3.33% down at $14.53 at the time of writing.

Latest Ratings for VFF

Mar 2021Cantor FitzgeraldMaintainsNeutral
Mar 2021Cantor FitzgeraldInitiates Coverage OnNeutral
Nov 2020Raymond JamesUpgradesOutperformStrong Buy

View More Analyst Ratings for VFF
View the Latest Analyst Ratings


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