Organigram takes hit on revenue warning
Organigram Holdings Inc (C:OGI)
Shares Issued 156,179,212
Last Close 11/12/2019 $3.57
Wednesday November 13 2019 - In the News
The Globe and Mail reports in its Wednesday edition that Organigram Holdings sent a shock through the cannabis sector on Monday evening when the company revealed a dramatic revenue miss. The Globe's Mark Rendell writes that Organigram now expects its quarterly sales to decline 34 per cent compared with the previous quarter. The announcement sent the company's shares tumbling on Tuesday. Producers are now growing more cannabis than is being sold in legal retail stores, and wholesale price compression and product returns are starting to show up in financial statements. Organigram does not report its fourth-quarter financial results until Nov. 25, but it is expecting to announce $16.4-million in sales, down from $24.8-million the preceding quarter. The company said it shipped $20-million worth of product, but expects $3.7-million to be returned unsold. "While we have largely anticipated little to no top-line growth for upcoming Canadian LP [licensed producer] results, the magnitude of the sequential decline is unexpected," wrote Eight Capital analyst Graeme Kreindler in a note Tuesday. Organigram blamed its poor quarter in part on the low number of retail stores in Ontario, where only 24 legal stores are open.
© 2019 Canjex Publishing Ltd.
Organigram Holdings cut to "market perform" Organigram Holdings Inc (C:OGI)
Shares Issued 156,179,212
Last Close 11/12/2019 $3.57
Wednesday November 13 2019 - In the News
The Globe and Mail reports in its Wednesday edition that BMO analyst Tamy Chen cut Organigram Holdings to "market perform" from "speculative outperform" after the release of weaker-than-anticipated preliminary fourth quarter results. The Globe's David Leeder writes that Ms. Chen trimmed her share target by $2 to $4. Analysts on average target the shares at $9.66. Ms. Chen says in a note: "We believe that the near term demand for dried flower is lower than previously anticipated, mainly driven by a slower than expected build-out of retail infrastructure in Canada. Over the near to mid-term, we believe that the growth in the quantity of cannabis sold will be lower than previously expected. Furthermore, the pricing pressure caused by a mismatch between supply and demand may lead to a lower average net selling price per dried flower equivalent. Given the lower than expected quantity of cannabis sold and the lower net selling price, we reduced our revenue and gross margin estimates for OGI. ... OGI noted that it has maintained a significant market-share in the recreational cannabis market, and that it has continued to report sequential improvement in the cost of cultivation per gram and overall harvested volume."
© 2019 Canjex Publishing Ltd.
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