Earnings season has been heating up for Canadian licensed producers (LPs) and many of these companies have reported strong growth. We are favorable on this trend and don’t expect it to end anytime soon as the recreational market is set to open and new international markets become more significant.
Today, we have provided highlights on 3 Canadian cannabis companies that recently reported earnings and are levered to the emerging marijuana opportunity. These companies are quite different from each other and we think it provides an interesting look at three publicly traded cannabis firms.
Cronos is Downgraded by Canaccord After Earnings
Cronos Group (CRON.V) (CRON) traded higher after reporting strong fourth-quarter financial results and this company has been nothing short of an execution story. From Israel to Germany, the Canadian cannabis producer continues to expand its reach and increase market shares in emerging opportunities.
Today, the company was downgraded by Canaccord Genuity and the broker-dealer changed its rating from Hold to Sell. Although Canaccord downgraded the shares, the firm raised the price target to $6.50 from $6.
Earlier this year, Cronos recorded a major milestone and became the first Canadian cannabis producer to be approved to trading on the Nasdaq. This was a significant development and a testament to the company’s success. Cronos is well positioned to capitalize on the global marijuana market and we are bullish on the long-term opportunity.
Although Cronos has continued to execute, the shares have come well off its recent highs and we are monitoring the recent price movements. This is a leading global cannabis company and one that investors need to watch.
Maricann is a Stock Investors Need to Watch
Maricann Group (MARI.CN) (MRRCF) reported 2017 fiscal year numbers that shocked many investors. During the year, the Canadian marijuana producer was impacted by a severe windstorm which blew sand and matter into two of Maricann’s five main flowering greenhouses. The company destroyed all plants in the affected greenhouses and significantly reduced inventory levels. Although the affected crops are insured, until the settlement is resolved Maricann has fully written down the amount.
This severely impacted the company’s earnings results and we are monitoring how the shares continue to trade. Maricann is the middle of a major expansion and today, announced that it is Good Manufacturing Practice (GMP) certified in accordance with the European Medicines Agency’s GMP standards.
This is a major milestone as the certification allows Maricann to export dried cannabis flower into the rapidly growing medical cannabis markets of the EU. While governments decide how to license and regulate production within their own jurisdictions on European soil, companies with the ability to export are at a distinct advantage to capitalize in these markets where a significant shortage of product exists.
Although Maricann reported a weak headline numbers, we see a bright future ahead and upside to current levels. As long as management is able to execute on its previously announced strategy, investors should be happy to be a part of this opportunity.
iAnthus: Capitalizing on the United States Marijuana Market
After the market closed yesterday, iAnthus Capital Holdings, Inc. (IAN.CN) (ITHUF) released fourth quarter financial results and provided an operational update. The Canadian company has been laser focused on the United States opportunity and now has seven operations and investments in six states, representing an addressable market of approximately 50 million people.
iAnthus is in the early innings of a major growth cycle and we are bullish on the company’s leverage to states like Colorado, Florida, Massachusetts, and New York. These markets represent very attractive opportunities and we are also favorable on the company’s leverage to the legal marijuana markets in Vermont and New Mexico.
In 2017, iAnthus recorded a $13.7 million net loss ($8.1 million of the net loss was non-cash) on $2.4 million in revenue. During the period, revenue grew by more than 600% on a year-over-year basis and the net loss is primarily attributable to increased costs as a result of the company’s expansion.
During the last six-months, iAnthus has raised approx. $40 million (CAD) and has a strong balance sheet. We are favorable on the company’s continued execution and will keep a close eye on how the shares trade from here. iAnthus has invested almost $100 million since inception and is well positioned to capitalized on the United States opportunity.