OrganiGram Stock in the Red Despite Health Canada Approval

OrganiGram stock

OrganiGram Holdings Inc. (TSX:OGI) (NASDAQ:OGI) has received Health Canada approval on 17 cultivation rooms, but OrganiGram stock is down 2.6%.

The licenses, which are valid until March 2020, will increase the company’s yield by approximately 15,000 kilograms per annum and brings its Moncton-based facility to a target operational capacity of 76,000 kilograms. These 17 newly licensed cultivation rooms are the first in the company’s Phase 4B expansion to receive approval. OrganiGram stock is currently valued at $4.81, having rebounded over 20% last week.

“Once again, we are pleased to receive licensing approval consistent with our expectations and the streamlined process we have experienced to date. Our Phase 4 facility expansion remains on schedule to meet growing demand and further contribute to efficiencies of scale,” said Greg Engel, CEO of OrganiGram Holdings.

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Perhaps the reason for OrganiGram stock dipping slightly is the timeframe on the cultivation process. While the company will begin transferring plants into the new rooms immediately, harvesting will not take place until the end of November, with the product eventually being made ready for sale by the end of OrganiGram’s fiscal fourth quarter in February. Despite poor trading trends today, the future does look reasonably bright for OrganiGram shares, after some bullish movements last week.

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Having been one of the few cannabis firms to generate positive EBIDTA earnings over recent quarters, analysts at Oppenheimer have issued the company with a perform rating, which indicates that it expects OrganiGram stock to perform at a level consistent with the S&P 500 over the next 12 to 18 months. As one of the few companies to acquire supply agreements in all 10 Canadian provinces, OrganiGram Holdings looks well-positioned to recover from a summer that saw its shares slump over 50%.

Another positive for OrganiGram stock is the company’s plans for Phase 5 expansion, which include an ediles and derivatives production facility that it will also seek approval from Health Canada for. With legalization 2.0 a little over a month away, don’t be surprised if this pot stock starts making some upward movement.

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