Organigram Has Declined A Lot And Is A Great Deal

seekingalpha06-23

Organigram stock has declined substantially, still up 16.4% in 2024, but well below its recent public offering price.Q2 report showed revenue fell 5% to C$37.6 million, with adjusted EBITDA at -C$1 ...

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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nOrganigram Has Declined A Lot And Is A Great Deal\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-06-23 20:49 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4700550-organigram-has-declined-a-lot-and-is-a-great-deal><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Organigram stock has declined substantially, still up 16.4% in 2024, but well below its recent public offering price.Q2 report showed revenue fell 5% to C$37.6 million, with adjusted EBITDA at -C$1 ...</p>\n\n<a href=\"https://seekingalpha.com/article/4700550-organigram-has-declined-a-lot-and-is-a-great-deal\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4189","symbol_name":"农产品","start_time":0,"source_url":"https://seekingalpha.com/article/4700550-organigram-has-declined-a-lot-and-is-a-great-deal","article_id":"2445056101","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1338491053/image_1338491053.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2445056101","pubTimestamp":1719146995,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Organigram stock has declined substantially, still up 16.4% in 2024, but well below its recent public offering price.Q2 report showed revenue fell 5% to C$37.6 million, with adjusted EBITDA at -C$1 mi","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4189":"农产品","BK4007":"制药","BK4075":"烟草","BK4023":"应用软件","BTI":"英美烟草","TLRY":"Tilray Inc.","MAPS":"WM Technology, Inc.","ACB":"奥罗拉大麻公司","BK4557":"大麻股","CGC":"Canopy Growth Corporation","OGI":"ORGANIGRAM HOLD","BK4547":"WSB热门概念","BK4585":"ETF&股票定投概念","VFF":"Village Farms International Inc","BK4588":"碎股"},"translate_title":"Organigram下降了很多，而且是一笔很大的交易","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"ACB":1,"BTI":1,"CGC":1,"MAPS":1,"OGI":1,"TLRY":1,"VFF":1},"content_text":"Organigram stock has declined substantially, still up 16.4% in 2024, but well below its recent public offering price.Q2 report showed revenue fell 5% to C$37.6 million, with adjusted EBITDA at -C$1 million.Stock valuation is cheap at 0.8X tangible book value, potential for significant gains if analyst outlook improves.   Vera Tikhonova I called Organigram (NASDAQ:OGI) my favorite cannabis stock again two months ago, and it has declined substantially. The stock is still up 16.4% in 2024, which is more than the 6.2% gain in the New Cannabis Ventures Global Cannabis Stock Index, but it is well below where it sold stock to the public in late March. The company, which is currently 19% of my model portfolio, the largest position, reported its Q2 in May, and I provide an update here. The Organigram Q2 Organigram, which changed its fiscal year-end last year from August to September, reported its Q2 ending 3/31 on May 14th. Analysts had expected revenue to be C$39 million with adjusted EBITDA of zero. The company was coming off of a long first quarter that included four months, and it missed badly. Revenue fell 5% to C$37.6 million, up 3% sequentially. Adjusted EBITDA was worse than expected as well at -C$1 million compared to +C$5.6 million a year earlier and C$0.1 million in Q1. The company blamed the revenue shortfall on its international efforts. Most of its revenue was Canadian adult-use, which rose 21% to C$33.1 million net during Q1. International plunged 80% to just C$2.2 million. The company began shipping to Germany and the UK during Q2, and it added Australia and another UK customer after Q2 Organigram has a lot of cash and no debt, but its operations used C$1.3 million in H1 after a use of C$8.3 million in Q2. The balance sheet showed C$71.4 million at the end of Q2, but it is actually much higher due to the capital raise of C$27.5 million in late March that closed in early April. It will get even better, as British American Tobacco (BTI) is still buying shares at C$3.22, which is more than double the current price but a penny below what the public just paid. Including the equity sale that closed in early April, tangible book value is now C$289.8 million, which is higher than its market cap of C$237.5 million. The price to tangible book value is 0.8X. An Updated Outlook for Organigram Ahead of the Q2 report, analysts were expecting FY24 revenue of C$178 million with adjusted EBITDA of C$13 million. I have shifted from Sentieo to its new owner, AlphaSense, and analysts are now expecting revenue to be C$151 million with adjusted EBITDA of -C$1 million. For FY25 and FY26, analysts project that revenue will be C$165 million and then C$188 million, and they expect adjusted EBITDA to be C$5 million and then C$18 million. These numbers are lower than what the analysts had predicted beforehand. Note that there are just three analysts for FY24 and FY25, and just two for FY26. I think that the numbers could be too low. The adjusted EBITDA margin for FY26 is just 9.6%. In my prior piece, I was below the analysts, who were assuming a margin of 15.9% on revenue of C$288 million for FY26. Their current outlook may be too low. I am using a 15% margin on their lower revenue outlook, which works out to be C$28 million. Canada released its April cannabis sales data last week, and cannabis growth in the country remains slow. Overall sales were C$428.6 million, which was up just 4.4% from a year earlier. This was up from the annual growth in March, which was a record-low 0.1%. For Organigram, which made an acquisition in Quebec a couple of years ago (Laurentian Organic), there was some good news: Quebec's sales soared! The C$61.6 million expanded 26% from a year earlier, growing 14.5% sequentially. There is a big problem in Canada: Taxation is too high. I am not counting on its program to change, but there is a chance that it could. A Look at the Organigram Chart Since the peak in early 2021, the stock has collapsed more than 93%. Over the past year, OGI is down 7.3%, which is a lot worse than the NCV Global Cannabis Index, which has gained 11.8%:   Schwab When I last wrote about Organigram, it was after the equity offering that left a big gap in trading. The resistance that I see at $2.45 would be ahead of that gap level of $2.50. The support that I see at $1.45 is close by. The volume has dropped recently, but Organigram will remain in the Global Cannabis Stock Index, which will be rebalanced at the end of June along with just five other LPs. I include 5 LPs on my Focus List, and adding in 2 names that are in the index but not on my Focus List, here is how OGI has fared relatively since my last article:   YCharts Each LP is down since April 19th, and OGI has been worse than average. I believe that the weakness in Aurora Cannabis (ACB) and Canopy Growth (CGC) since then could be weighing upon OGI. OGI has declined by more than the Global Cannabis Stock Index since then too, as it has dropped 9.6%. I wrote in late April about why I no longer owned Village Farms (VFF) in my model portfolio for my investing group, but I do now. OGI is my largest position at 19%, but Village Farms is a big part too at 15.4%. These are the only LPs that I currently include. Assessing the Cheap Valuation of Organigram I have already shared that the stock of this debt-free company loaded with cash trades at just 0.8X tangible book value. This is a lot better than the two largest LPs by market cap, Canopy Growth and Tilray Brands (TLRY). The other LP that I include in my model portfolio, Village Farms, doesn't have a lot of debt but trades at just 0.6X. The forecasted numbers have come down, so the valuation relative to adjusted EBITDA has gotten worse. For a year-end target, I use 75% of the FY25 and 25% of the FY26 estimates. I was using 15X enterprise value to adjusted EBITDA two months ago, and . Taking the estimates works out to an enterprise value of C$124 million. Adding the cash in would yield C$223 million, which is C$1.99, a bit lower than the current price of C$2.12. I think that this is perhaps too low of a valuation for this federally legal and NASDAQ-listed stock, and, as I said above, the estimates could rise. Using a multiple of 20X on these depressed estimates, would yield an enterprise value of C$165 million, which would imply a market cap of C$264 million. This would be C$2.36, or just 11% higher. Using my higher estimates (a 10% margin on analyst revenue for FY25 and a 15% margin for FY26) would yield an enterprise value of C$291 million at 15X. This would be C$390 million market cap or $3.48 at year-end. A 64% gain is less than what I envision for ancillary company WM Technology (MAPS), which I discussed a week ago as a stock that could double by year-end, but C$3.48 (or US$2.51) would be near my resistance that I discussed above and would fill the gap from the equity offering in late March. It is below where the warrants that were issued have an exercise price (C$3.65). Conclusion Organigram has had a very rough few months. First, the company surprised the market with an equity offering in late March. Then, since April 30th, cannabis stocks have been selling off. I think that the stock is very cheap compared to its tangible book value, and I have shared how it could rally a lot if analysts raise their FY25 and FY26 outlooks. Strategic investor BTI already owns a lot and is increasing its stake further at a much higher price than the current one. These things are very hard to predict, but the company could acquire Organigram.  The Canadian cannabis market is maturing. Organigram has exposure to several other countries. While rescheduling in the United States will not have an impact, it could boost investor sentiment for the stock, which is very cheap compared to Canopy Growth and Tilray.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.24.2","shortVersion":"4.24.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2445056101"}