Organigram stock is moving higher on Tuesday as an analyst at Cantor started coverage on Organigram Holdings (TSX:OGI) (NASDAQ:OGI) with an Overweight rating and a price target of $17.10 CAD.
Jeffries Recently Upgraded
The cannabis industry has been through a tough period over the past few months, and very few companies have been able to escape the downturn. In that regard, Organigram Holdings has not been an exception. As a matter of fact, after reaching its highest level in May, it has since plunged by as much as 64%. However, some experts believe that Organigram is one of those cannabis stocks that could have a major upside. Back in October, Organigram stock enjoyed a mini rally after Jeffries analyst Ryan Tomkins upgraded the stock and set a target price that represents an upside of more than 100%.
In this regard, it is first important to understand that during the first phase of cannabis legalization in Canada, the regulatory authorities awarded too many licenses. It has become quite clear that the market is simply not big enough yet to sustain so many companies.
That being said, Organigram Holdings is one of the very few companies that have managed to be profitable, and even in the quarter that ended in May, it managed to turn a profit. In the nine months until May this year, the company made $22.9 million CAD in net profit, and while that is not a huge figure, it is promising.
Organigram stock is up 2.54% at $4.44 on the TSX.
On the other hand, it has now become clear that many companies have been struggling to sell their products, and back in July, it had been reported that inventory for dry flower had reached 347,171 kilos. Organigram, on the other hand, reported that the dry flower that it had in its inventory could last many months, and it is quite clear that the company would be able to sell its products when the time comes. Additionally, it is growing its capabilities, and in the near future, it will have as many as 144 grow rooms under control.
Organigram boasts of yields as high as 100 grams per plant, while peers like Aurora Cannabis (TSX:ACB) (NYSE:ACB) have yields of 35 grams to 65 grams. While it would be better to be cautious and wait for the company’s financial results, it seems that Organigram stock could well prove to be a prudent choice.
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