Twitter Facebook LinkedIn YouTube

PI Financial has Initiated Coverage MedReleaf Corp (TSX: LEAF)

Video Platform Video Management Video Solutions Video Player

Analyst Jason Zandberg gives the company a buy recommendation along with a speculative risk rating and a 12-month target of $14.50, a premium of 82% to the $7.95 price on June 28th, the day the report was issued.

Additional Information:

Company: MedReleaf Corp
Website: http://www.medreleaf.com
Stock Symbol: TSX: LEAF
Date Published: Jul 5, 2017
Transcript: Available

Video Transcript:

I’m Samantha Deutscher for Investmentpitch Media

Today’s buy recommendation comes from PI Financial.

PI Financial has initiated coverage on MedReleaf Corp. (TSX:LEAF).

Analyst Jason Zandberg gives the company a buy recommendation along with a speculative risk rating and a 12-month target of $14.50, a premium of 82% to the $7.95 price on June 28th, the day the report was issued.

Based in Markham, Ontario, the company is one of the largest medical cannabis producers in Canada.

MedReleaf’s current production yields of 300 grams per square foot per year are more than twice the average of the typical indoor producer.

In 2016, MedReleaf sold 3,205 kilograms of cannabis which, PI Financial estimates, equates to approximately 19% of the total Canadian market for dried cannabis.

The Markham facility has the capacity to produce 7,000 kilograms of dried cannabis.

The company recently received a cultivation license for a second location in Bradford, Ontario, which has the potential to produce 28,000 kilograms of cannabis.

Neil Closner, CEO, stated: "We doubled revenue in fiscal 2017 and we did it profitably – growing Adjusted EBITDA more than threefold. With the successful completion of our IPO in June we have $74 million in financing to help fund our strategic growth initiatives including: expanding our capacity more than five times to support up to 35,000 kilograms of production; scaling our domestic business; developing our recreational brand portfolio; and international expansion, which we believe positions MedReleaf well for future growth and profitability."

MedReleaf was the first LP to launch cannabis oil capsules in November 2016.

In addition, its cannabis oil extraction process incorporates a proprietary process which results in a superior terpene profile which favourably impacts its medicinal impact.

Jason Zandberg stated: “MedReleaf is one of the few LPs that is already profitable and is among the lowest cost producers. We are forecasting revenue of $58.8 million in fiscal year 2018, $153.8 million in fiscal year 2019 and $235.8 million in fiscal year 2020.”

The shares are currently trading at $8.40, well below the $14.50 price target, and with 90.8 million shares outstanding, the company is capitalized at $763 million.

For more information, please visit the company’s website www.medreleaf.com or contact Dennis Fong, Investor Relations, at 416-283-9930 or email investorrelations@medreleaf.com.

For more information about PI Financial or to obtain a copy of their research report, contact your nearest PI Financial office. Their branches are listed on their website at www.pifinancialcorp.com.

I’m Samantha Deutscher for Investmentpitch Media