In this week's "Rising High," The Fly's recurring series focused on cannabis stock news, The Fly looks back at fourth quarter earnings, revenue guidance and analyst views.
ZYNERBA REPORTS Q4 EARNINGS: On Tuesday, Zynerba (ZYNE) reported a fourth quarter loss per share of (46c), which compared to an analyst consensus of a loss of per share of (50c). The company also reported cash and cash equivalents pf $70.1M as of December 31 and said management believes that the cash runway is sufficient to fund operations and capital requirements beyond the expected NDA submission and potential approval of Zygel in FXS and into the second half of 2021. “The fourth quarter of 2019 capped off a year of strong execution by Zynerba,” said CEO Armando Anido. “With a number of shots-on-goal in our clinical pipeline, each with near term milestones, our outlook is promising for the remainder of 2020 and beyond. We are positioned for major news events throughout this year and next, including the topline results from our pivotal CONNECT-FX trial of Zygel in patients with Fragile X syndrome which are expected late next quarter.” Following the report, Canaccord analyst Sumant Kulkarni noted Zynerba reported generally in line Q4 results due to lower expenses but said he continues to like the risk/reward at current valuation levels. The analyst likes the shares heading into near-term pivotal data for Zygel in Fragile X syndrome where no product has been approved. Kulkarni reiterated his Buy rating and $18 price target on Zynerba shares.
DELTA 9 OFFERS REVENUE GUIDANCE: On Tuesday, Delta 9 Cannabis (VRNDF) said it sees fourth quarter revenue of C$10M-C$10.5M, which compares to C$5.27M last year. The company anticipates reporting direct cannabis production cost per gram of 91c and total cost per gram of $1.04 for 4Q19, compared with $1.08 and $1.21 respectively for 3Q19. Delta 9 also anticipates reporting total grams of cannabis produced of 1,305,806 for Q4, compared with 871,517 grams of cannabis for Q3. "We are anticipating reporting record year-over-year and sequential results for the fourth quarter of 2019", said CEO John Arbuthnot. "Delta 9 is working very hard to separate itself from its peers by posting strong financial results and continuing to grow and diversify its revenue streams from its three core business units."
IIPR CLOSE ON GTI TRANSACTION, BUYS FLORIDA PROPERTY: Innovative Industrial Properties (IIPR) announced Monday that it closed on a sale-leaseback transaction with Green Thumb Industries (GTBIF) for its cannabis cultivation and processing facility in Oglesby, Illinois. The purchase price for the property was $9M. GTI is also expected to make certain improvements to the property, for which IIP has agreed to provide reimbursement of up to $41M. Assuming full reimbursement for such improvements, IIP's total investment in the property will be $50M. The company also announced Wednesday that it closed on the acquisition of a property in Wimauma, Florida, which comprises approximately 373,000 square feet of industrial and greenhouse space, from an affiliate of Parallel. The purchase price for the property was $35.3M, excluding transaction costs. Assuming full reimbursement for the tenant improvements, IIP's total investment in the property will be $43.5M.
ANALYSTS INITIATE CANNABIS COVERAGE: Stifel analyst W. Andrew Carter initiated coverage of Aphria (APHA) on Monday with a Hold rating and C$4.50 price target. He sees a balance between the company's "robust" revenue growth potential and "formidable" balance sheet and his outlook for downside to consensus estimates, particularly around the rate at which the business will scale, Carter said. The analyst also initiated coverage of Hexo (HEXO) Monday with a Sell rating and C$1.15 price target. The company's "precarious positioning" in the Canadian cannabis market suggests downside to consensus estimates and its ongoing cash needs burden its capital structure, Carter said. Further, the analyst believes Hexo management's "credibility gap that will be difficult to overcome." On Tuesday, Craig-Hallum analyst Eric Des Lauriers initiated coverage of GrowGeneration (GRWG) with a Buy rating and $7 price target. The analyst believes that GrowGeneration provides cannabis legalization upside without the legal risk. The analyst also initiated coverage of Innovative Industrial Properties on Tuesday with a Hold rating and $95 price target. While the company's "blistering acquisition pace" generates significant dividend growth, the analyst thinks the current 6% 2021 dividend yield appropriately balances its risk/reward.
CV SCIENCES PRICE TARGET LOWERED: Cantor Fitzgerald analyst Pablo Zuanic lowered the firm's price target on CV Sciences (CVSI) on Monday to $1.60 from $4.20 and kept an Overweight rating on the shares. The continued lack of clear guidelines for cannabidiol from the FDA limits the scope for new distribution gains in the food, drug and mass channel, while increased hemp supplies further "clog the specialty channel with a slew of new brands," Zuanic said.
OTHER CANNABIS STOCKS: Other publicly-traded companies in the space include Aleafia (ALEAF), Akerna (KERN), Aurora Cannabis (ACB), Auxly (CBWTF), Biome Grow (BIOIF), CannTrust (CTST), Canopy Growth (CGC), Canopy Rivers (CNPOF), Cresco Labs (CRLBF), Cronos Group (CRON), DionyMed Brands (DYMEF), Elixinol Global (ELLXF), General Cannabis (CANN), Greenlane (GNLN), Harborside (HSDEF), Hemp Inc. (HEMP), India Globalization Capital (IGC), Indiva (NDVAF), ICC International Cannabis (WLDCF), Khiron Life Sciences (KHRNF), Liberty Health Sciences (LHSIF), MediPharm Labs (MEDIF), MedMen (MMNFF), MJardin (MJARF), Origin House (ORHOF), Organigram (OGI), 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) and Wildflower Brands (WLDFF).
