Cannabis Weekly Round-Up: Analysts Encouraged by New Results

During the past trading week (January 13 to 17), two marijuana producers offered quarterly results that may hint at better days for the overall industry.

A new unique cannabis listing made its debut on an emerging exchange in Canada, while a leading producer enjoyed a boost to its share price thanks to a significant pair of hires.

Here’s a closer look at some of the biggest cannabis news over the week.

Analysts encouraged by recent reports from Organigram and Aphria

Analysts praised some elements of the quarterly results shared by Canadian producers Organigram Holdings (NASDAQ:OGI,TSX:OGI) and Aphria (NYSE:APHA,TSX:APHA) this past week.

“Our only concerns out of the quarter are a capital projects to-do list that should see spending remain stubbornly high, and questionable timing of equity financing,” analysts from CIBC Capital Markets said of the Organigram results. The New Brunswick-based producer reached a net revenue line of C$25.2 million for its Q1 fiscal 2020. The company secured an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) mark of C$4.9 million, compared to the C$1.4 million expected line by analysts.

“Going forward we expect continued growth to be propelled by sales into the provinces for recreational adult-use will drive positive (earnings before interest, taxes, depreciation, and amortization) in fiscal 2020,” analysts from Haywood Securities said.

Meanwhile, Aphria posted net revenues of C$120.6 million for its fiscal 2020 Q1 period, a decrease from its previous quarterly revenue. The CIBC researchers were encouraged by Aphria’s ability to gain terrain in its market share of the Ontario market. Aphria now holds a 13.8 percent share of the provincial market.

European ETF offers cannabis exposure

As part of a collaboration between Purpose Investments and European firm HANetf, the duo launched a brand new marijuana exchange-traded fund (ETF) in Europe. The Medical Cannabis & Wellness UCITS ETF (XETRA:CBDX) offers investors exposure into some names operating in the medical cannabis space. No companies with recreational operations were included due to regulations.

“At the forefront of European cannabis investing are family offices and hedge funds, which essentially have historically been named specific investors, and what we aim to offer them is a beta exposure to the industry as a whole,” Nawan Butt, associate portfolio manager with Purpose Investments, told the Investing News Network (INN).

The fund is being offered on the Deutsche Boerse XETRA exchange based in Germany. According to Butt, CBDX will be updated by way of a quarterly balance to add any stocks into its index.

Some of the top-weighted stocks included in the brand new ETF include Corbus Pharmaceuticals Holdings (NASDAQ:CRBP), Scotts Miracle-Gro (NYSE:SMG) and Innovative Industrial Properties (NYSE:IIPR).

Market updates

As it opened the doors to the sales of edible products online, the Ontario Cannabis Store effectively sold out of all its offerings within hours of launch, according to multiple reports.

“In less than half an hour, we were sold out of the soft chew category and other edible products were becoming very limited,” Ontario Cannabis Store Communications Director Daffyd Roderick told Marijuana Business Daily.

Consumers were able to purchase from the over 70 ingestible cannabis product types, including gummies and cookies.

Cannabis firm Tilray (NASDAQ:TLRY) earned itself a boost in the open market this week as investors reacted positively to the hiring of a new chief operating officer, Jon Levin, and chief financial officer, Michael Kruteck. Both Levin and Kruteck come to Tilray following stints with recognizable large brand companies.

Kruteck is a former Revlon (NYSE:REV) commercial executive, while Kruteck held roles in Pharmaca Integrative Pharmacy and Molson Coors Beverage (NYSE:TAP,TSX:TAP).

“Jon and Michael come to Tilray with extensive expertise in their respective fields and we look forward to their contributions as we pioneer the future of cannabis and hemp around the world,” Brendan Kennedy, CEO of Tilray, said in a press release.

In an exclusive interview with INN, Hanna Shanes, chief compliance officer at 365 Cannabis, explained the role of data protection related to the cannabis industry and how, in her opinion, companies are not thinking enough about it.

“I think the bigger organizations are thinking of it, but I think that often the impetus for them taking action is either a consumer inquiry, in which case it’s nearly too late, or it’s an audit for some of these publicly traded companies (that) is the first moment that they realize they have to get real about security and privacy,” she told INN following her talk at the 2020 edition of the Vancouver Lift & Co. (TSXV:LIFT,OTCQB:LFCOF) Cannabis Expo.

Collaborating research firms Arcview Market Research and BDS Analytics issued an update indicating 2019 produced US$15 billion in global cannabis sales, a 48 percent hike from the previous year.

“The disconnect between investor sentiment and the facts on the ground is as dramatic as anything I’ve seen since the dot.com stock crash of 2000, which happened just as the internet caught fire with consumers,” said Tom Adams, editor-in-chief of Arcview Market Research and managing director of BDS Analytics Industry Intelligence.

The study highlighted the performance of Florida and Massachusetts as key state markets. It also gave an initial forecast for 2020 sales of a projected 38 percent growth thanks in large part to the continued expansion of the market.

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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.