Haywood Capital Markets has initiated coverage for Valens GroWorks Corp (CSE:VGW) and has given the company a buy recommendation of $5.25.
Haywood Capital Markets has initiated coverage for Valens GroWorks Corp (CSE:VGW), an extraction and research-focused cannabis company, and has given the company a buy recommendation of $5.25. According to Haywood, Valens is poised to be a leader in the extraction services sector. The company has a significant and expanding annual cannabis production capacity of 150,000 kilograms. Haywood believes that this will benefit the company as the consumer demand for oil derivative products accounts for approximately 50 percent of the Canadian cannabis market.
The report outlined Valens’ agreements with various licensed producers, their extraction contracts and partnerships. To date, Valens has agreements in place with Organigram (OTC:OGRMF), Sundial Growers Inc. and GTEC Holdings (TSXV:GTEC), to name a few. The company’s partnerships and agreements with other licensed producers will provide Valens with near-term revenue growth as the agreements ensure that their processing facilities are always in use and that they have shelf-space in various retail and online sales channels. Valens has also entered into R&D agreements with other licensed producers to develop numerous consumer products for the Canadian market.
Haywood believes that these partnerships will help prepare Valens for the next wave of legalization, which will launch edibles and other cannabis extract-based products into the market. Health Canada is expected to release regulations for edibles, concentrates and topicals by October 17, 2019.
Click here to see a summary of the report.