In this week's "Rising High," The Fly's recurring series focused on cannabis stock news, The Fly looks back at a grant of initial order under the CCAA, cannabis firm earnings and analyst views.
CANNTRUST UNABLE TO GENERATE REVENUE: CannTrust Holdings (CTST) announced Monday that the company obtained an order from the Ontario Superior Court of Justice granting protection under the Companies' Creditors Arrangement Act. In accordance with the order, all creditors of CannTrust, CannTrust Inc., CTI Holdings Inc., and Elmcliffe Investments, as well as the plaintiffs in the putative class actions and other litigation brought against the Applicants, will be stayed from enforcing their claims. The company said, "Despite the efforts by CannTrust's management and Board of Directors to preserve the company's cash liquidity while seeking to restore the company to operations and resolve the multiple litigations and other contingent claims facing the company, the Company's future remains uncertain. Without its cannabis licenses, the company has been unable to generate any meaningful revenue since June 2019…At present, and in light of seeking CCAA protection, its reduced liquidity position and the contingent claims it is facing, the company does not intend to devote additional time or money towards curing its public disclosure defaults by completing and resuming the filing of required reports under Canadian and United States securities laws.”
CANNABIS FIRMS REPORT EARNINGS: On Monday, Cronos Group (CRON) reported fourth quarter earnings per share of 16c on net revenue of $7.31M, which compared to net loss per share of (5c) and net revenue of $4.28M last year. The company also reported that it has been designated an essential business and global facilities currently remain operational. Canaccord analyst Matt Bottomley downgraded Cronos Group to Sell from Hold on Tuesday. The analyst noted Q4 results came in below expectations on a modest top-line improvement, inventory write-offs, and deepening adjusted EBITDA losses. Bottomley lowered his price target to C$7.00 from C$12.00 on Cronos Group shares. BofA analyst Christopher Carey also downgraded Cronos Group on Thursday to Neutral from Buy with a C$9 price target, down from C$11. Carey said that while he appreciates that Cronos has not intended to be in a "revenue race," likely shielding it from pitfalls faced by rivals, it has not commercialized its work allocated to brand/product development. He said he still sees a path for Cronos to emerge from the early stages of this new sector with leadership but prefers companies with tangible businesses.
On Monday, Greenlane (GNLN) reported fourth quarter net loss per share of 27c on a revenue of $37.24M, which compared to an analyst estimates of loss per share of 7c and revenue of $38.36M. Roth Capital analyst Scott Fortune lowered the firm's price target on Greenlane on Tuesday to $4 from $9 and keeps a Buy rating on the shares. The analyst noted that the company reported Q4 revenues of $37.2M, off 28%, due to less emphasis on JUUL, a weak rebound in national vape demand, and a 2.0 roll-out delay in Canada, ahead of COVID-19 disruption to its distribution nationally.
MORE EARNINGS: Additionally on Monday, Hexo (HEXO) reported Q2 net revenue of C$17M, which compares to C$13M last year. Management estimated that the working capital as at January 31, 2020 and forecasted cash flows will require additional capitalization in order to meet the company's obligations, commitments and budgeted expenditures through January 31, 2021. The company also said it remains operational amid the COVID-19 pandemic. Desjardins analyst John Chu downgraded Hexo to Hold from Buy on Tuesday with a price target of C$1.40, down from C$3.50. The analyst said near-term funding requirements overshadow better than expected Q2 adjusted EBITDA loss as the company will need up to C$55M in equity financing by April 30. Chu expects a delay in the start-up of its Belleville facility and a less aggressive production rollout due to COVID-19. Also on Tuesday, BofA analyst Christopher Carey resumed coverage of Hexo with an Underperform rating and C$1.00 price target. The analyst cited limited visibility on cash for the company, stating that his assumed 1-times expected 2021 sales multiple on the stock is the low end of the target range for his cannabis coverage.
On Monday, Medipharm (MEDIF) reported Q4 revenue of C$32.4M, which compared to C$10.2M last year. The company added that it expects market challenge to persist in the near-term.
CANTOR LOWERS PRICE TARGETS: Cantor Fitzgerald analyst Pablo Zuanic lowered the firm's price target on Aphria (APHA) on Wednesday to C$9.30 from C$11.50 and kept an Overweight rating on the shares ahead of the company's Q3 results on April 15. In a research note to investors, Zuanic says he expects the company to see sequential cannabis sales growth of about 50%, to maintain guidance for the year and not to use COVID-19 as an excuse to withdraw it. Despite the lowered price target, Zuanic says his conviction is strengthened.
Zuanic also lowered the firm's price target on Organigram (OGI) on Wednesday to C$5.80 from C$9.00 and kept an Overweight rating on the shares ahead of the company's April 14 Q2 results. Zuanic said he does not think the quarter will be a catalyst for near-term outperformance, but thinks Organigram is one of the better-managed LPs with attractive valuation. He noted that the company was "slow off the gate" on 2.0 and says he expects quarter over quarter weakness int he wholesale business based on results from other companies.
On Monday, Zuanic also lowered the firm's price target on Cresco Labs (CRLBF) to $10 from $12 and kept an Overweight rating on the shares after holding a conference call with the company's management team. Zuanic said that he continues to believe the cannabis sector selloff is over done and thinks COVID-19 will prove the sector's resilience and may also accelerate favorable regulatory changes.
MJARDIN TERMINATES JV WITH RAMA FIRST: MJardin Group (MJARF) announced Tuesday that as part of its ongoing review, evaluation and turnaround process, it has actioned amendments to the Managed Services Agreements which were negotiated and put in place by previous management. As part of the same review process, MJardin is also terminating its previously announced joint venture partnership with Rama First Nation that included prospective plans for a cultivation facility. The Company continues to work with its MSA partners and Rama First Nation to finalize the updated agreements. The decision to dissolve of the joint venture partnership with Rama First Nation, and its prospective 94,000 sq. ft. indoor greenhouse cultivation facility, was based on fiscal responsibility, preservation of the company's capital in today's economic climate, and developments in the cannabis cultivation market in Canada.
OTHER CANNABIS STOCKS: Other publicly-traded companies in the space include Aleafia (ALEAF), Akerna (KERN), Aurora Cannabis (ACB), Auxly (CBWTF), Biome Grow (BIOIF), Canopy Growth (CGC), Canopy Rivers (CNPOF), CV Sciences (CVSI), Delta 9 (VRNDF), DionyMed Brands (DYMEF), Elixinol Global (ELLXF), FluroTech (FLURF), General Cannabis (CANN), Green Thumb Industries (GTBIF), GrowGeneration (GRWG), Harborside (HSDEF), Hemp Inc. (HEMP), India Globalization Capital (IGC), Indiva (NDVAF), Innovative Industrial Properties (IIPR), ICC International Cannabis (WLDCF), Khiron Life Sciences (KHRNF), Liberty Health Sciences (LHSIF), MedMen (MMNFF), Neptune Wellness Solutions (NEPT), Origin House (ORHOF), Planet 13 Holdings (PLNHF), Real Brands (RLBD), Sproutly (SRUTF), Sunniva (SNNVF), Supreme Cannabis (SPRWF), Tetra Bio-Pharma (TBPMF), Tilray (TLRY), Trulieve (TCNNF), Valens (VLNCF),Vireo Health (VREOF), Wayland Group (MRRCF), WeedMD (WDDMF), Westleaf (WSLFF), Wildflower Brands (WLDFF) and Zynerba (ZYNE).
CannTrust
+ (+0.00%)
Cronos Group
+0.21 (+4.00%)
Greenlane
+0.15 (+9.74%)
Hexo
+0.0619 (+9.07%)
Medipharm Labs
+ (+0.00%)
APHA
+
Organigram
+0.055 (+3.06%)
MJardin Group
+ (+0.00%)
Aurora Cannabis
+0.0746 (+9.29%)
CV Sciences
+ (+0.00%)
Canopy Growth
+0.68 (+5.01%)
Trees Corporation
+ (+0.00%)
IGC Pharma
+0.015 (+3.41%)
Tilray
+0.55 (+9.40%)
Trulieve Cannabis
+ (+0.00%)
ZYNE
+