OrganiGram Holdings Inc. OGI is slated to release third-quarter fiscal 2020 results on Jul 21, before market open.
In the last reported quarter, the company reported a loss of 2 cents per share while the Zacks Consensus Estimate was pegged at a loss of a penny.
Let’s take a look at how things are shaping up prior to this announcement.
Factors at Play
Similar to the last-reported quarter, OrganiGram is expected to have gained from deepened focus on building its brand equity, product research and development to introduce innovative and differentiated products, and improve cultivation and manufacturing practices.
The company, in May, announced the availability of a number of products from its cannabis 2.0 adult-use recreational portfolio, thus expanding its medical cannabis offerings. The available products include ready-to-use Edison Cannabis Company (Edison) vape pens powered by Feather; Edison-branded pods specifically for PAX Era vaporizers; and Edison Bytes chocolates in dark and milk chocolate. This is expected to have considerably boosted the company’s top line in the third quarter of 2020.
Organigram Holdings Inc. Price and EPS Surprise
Organigram Holdings Inc. price-eps-surprise | Organigram Holdings Inc. Quote
OrganiGram’s announcement of its first shipments of Edison vape pens, pods and cannabis-infused chocolate to retailers across Canada earlier in 2020 was followed by its investment in a high-speed, high-capacity, fully automated chocolate manufacturing line. This is expected to have significantly boosted the company’s production capacities in the to-be-reported quarter. The company is also receiving favorable customer responses, which is boosting its morale for further product innovation.
In the to-be-reported quarter, the company introduced Trailer Park Buds — an adult recreational use consumer brand — through a new licensing agreement with Trailer Park Boys Incorporated. This is likely to have boosted sales.
OrganiGram’s cannabis 2.0 products, which include Trailblazer Spark, Flicker and Glow 510-thread Torch vape cartridges, are expected to have significantly contributed to revenues on growing customer demand. Further, the company’s recent addition to its hybrid category, El Dorado, should have started contributing to sales in Nova Scotia and British Columbia from the fiscal third quarter. In April, the company expanded its distribution with its first shipment to Shoppers Drug Mart under a distribution agreement announced in February. This is likely to have contributed to sales.
The company is, however, wary about its fiscal third-quarter results due to the pandemic-led business disruptions. An estimated $0.6 million as a one-time charge is expected by the company in the face of temporary layoffs.
Overall, OrganiGram projects the fiscal third quarter to have been adversely impacted in terms of net revenues unlike the fiscal second quarter due to the pandemic-led economic crisis. Revenue growth is envisioned to have been sequentially weak due to insignificant wholesale revenues recorded in the quarter.
Meanwhile, the Zacks Consensus Estimate for third-quarter fiscal 2020 is pegged at an adjusted loss of 2 cents. The consensus mark for revenues is currently pegged at $16.4 million, suggesting a decline of 11.1% from the year-ago reported figure.
What the Quantitative Model Predicts
Per our proven model, a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver a positive earnings surprise. But this is not the case here as you will see below.
Earnings ESP: OrganiGram has an Earnings ESP of +9.09%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #5 (Strong Sell).
Stocks Worth a Look
Here are a few medical stocks worth considering as these have the right combination of elements to beat on earnings this reporting cycle.
Abbott Laboratories ABT has an Earnings ESP of +10.16% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Exact Sciences Corporation EXAS has an Earnings ESP of +23.14% and a Zacks Rank of 2 at present.
Thermo Fisher Scientific Inc. TMO has an Earnings ESP of +14.37% and is a Zacks #1 Ranked stock.
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