In this week's "Rising High," a recurring series focused on cannabis stock news, The Fly looks back at Organigram's (OGI) coverage initiation, price target increases for Innovative Industrial Properties and GrowGeneration, Neptune Wellness' new partnership, and much more. Here are some of the highlights:
POSITIVE TRENDS IN ADULT-USE SALES: Earlier this week, Alliance Global Partners analyst Aaron Grey initiated coverage of Organigram with a Buy rating and C$4 price target. Given the company's recent positive trends in adult-use sales as well as expectations for more normalized profitability in 2021, the stock should trade at least in-line with the Canadian cannabis average, Grey contended. The analyst believes Organigram's low-cost cultivation sets it up to absorb pricing pressures in the market.
NEW FUNDING: On Monday, Roth Capital analyst Scott Fortune raised the firm's price target on Innovative Industrial Properties (IIPR) to $120 from $110, while keeping a Buy rating on the shares. The analyst noted that the company has announced a public offering of 1.8M shares that was upsized to 3,085,867 shares after exercising the option to purchase additional shares on July 2. He sees the about $259M raised as positive, as it substantially increases its growing pipeline deployment to meet strong MSO tenant demand, while taking advantage of the industry's capital crunch. Fortune believes the new funding will be placed through second half of 2020 and substantially drive 2021 recurring rental revenue higher.
'STRONG PLAY' AMID COVID UNCERTAINTY: On Wednesday, Alliance Global Partners analyst Aaron Grey raised the firm's price target on GrowGeneration (GRWG) to $10 from $8 and kept a Buy rating on the shares after raising his sales estimates from its existing store base and e-commerce division in 2020. The company's recent equity raise and stronger cash position gives it dry powder to accelerate its strategy of rolling up hydroponics stores across the U.S., said Grey, who views GrowGeneration as "a strong play on cannabis amid COVID uncertainty."
NEW PARTNER: Neptune Wellness (NEPT) said via Twitter that, "Excited that our hand sanitizer is now shipping to our new retail partner @costco [COST]. We developed natural and effective hand sanitizer in collaboration with @IFF [IFF]. We will continue to innovate to help improve health and wellness. @nasdaq $NEPT"
NEW CHIEF COMMERCIAL OFFICER: Aurora Cannabis (ACB) announced on Monday that Miguel Martin, President of Aurora USA and head of Reliva has been appointed Chief Commercial Officer of Aurora, effective immediately. Martin will replace Darren Karasiuk who has held this position at Aurora since February 2019.
SUPPORT FOR TURNAROUND PLAN: MedMen Enterprises (MMNFF) has announced the execution of definitive agreements with certain lenders, including Gotham Green Partners, Stable Road Capital and affiliates, and the company's "most significant landlord," Treehouse Real Estate Investment Trust, as part of a financial restructuring and turnaround plan to support the expansion of the company's retail footprint. The plan will defer approximately $32M in cash commitments over the next 12 months and provide additional balance sheet flexibility, the company said.
As part of the plan, the company and Gotham Green Partners have further amended and restated the securities purchase agreement that governs the convertible facility led by funds affiliated with GGP. In connection with the amendments to the convertible facility, the company is now subject to certain additional covenants thereunder, which are consistent with the company's internal business plan. The company is required to adhere to its turnaround plan for certain cash expenditures such as corporate expenses, capital expenditures and leases. The covenants expire once the company achieves two consecutive fiscal quarters of being free cash flow positive.
"Implementing our turnaround plan is the best way to ensure that MedMen continues on its path to building the leading cannabis retailer in the U.S. We believe the widespread support we have received from our lenders and landlords will allow us to continue execution of the turnaround, continue to grow our best-in-class retail operations and drive towards positive free cash flow," said MedMen Interim CEO Tom Lynch.
OTHER CANNABIS STOCKS: Other publicly-traded companies in the space include Auxly Cannabis (CBWTF), Zynerba Pharmaceuticals (ZYNE), Akerna (KERN), Aleafia (ALEAF), Aphria (APHA), Biome Grow (BIOIF), CannTrust (CTST), Canopy Growth (CGC), Canopy Rivers (CNPOF), Cronos Group (CRON), CV Sciences (CVSI), Delta 9 (VRNDF), DionyMed Brands (DYMEF), Elixinol Global (ELLXF), FluroTech (FLURF), General Cannabis (CANN), Green Thumb Industries (GTBIF), Greenlane (GNLN), Harborside (HSDEF), HEXO (HEXO), Hemp Inc. (HEMP), India Globalization Capital (IGC), Indiva (NDVAF), Indus Holdings (INDXF), ICC International Cannabis (WLDCF), Khiron Life Sciences (KHRNF), Liberty Health Sciences (LHSIF), MediPharm Labs (MEDIF), Mjardin (MJARF), Origin House (ORHOF), Planet 13 (PLNHF), Real Brands (RLBD), Sproutly (SRUTF), Sunniva (SNNVF), Supreme Cannabis (SPRWF), Tetra Bio-Pharma (TBPMF), Valens (VLNCF), Tilray (TLRY), Trulieve (TCNNF), Vireo Health (VREOF), Wayland Group (MRRCF), WeedMD (WDDMF), Wildflower Brands (WLDFF), YSS Corp. (YSSCF) and 4Front Ventures (FFNTF).
