RE:Eight Capital: Neutral rating and $0.15 target for ZENAcbcguy101 wrote: According to Eight Capital:
https://research.viiicapital.com/Reports/Research/2019/November/Cannabis112919.pdf
November 29, 2019
CQ3/19 Earnings Read-throughs for LPs - Supply glut leads to volatile sell-in, price compression and returns/writedowns: LPs saw average selling prices decline by 9%, on average, while certain LPs also recognized return provisions and write-downs, which will Settlements reached with Bank of America and HSBC in a class action relating to SSA Bonds.likely persist into Q4/19 and early 2020. Retail and derivatives remain key to unlocking further value, but uncertainty remains high: Timing of additional stores in ON and shipments of derivatives to provinces have yet to be officially disclosed. LPs continue to spend in anticipation of future market growth: FCF averaged $(110.8) MM across our coverage universe in Q3, while cannabis sales declined by a weighted average of 6%.
Target Revisions & Rating Changes Exiting CQ3/19 Earnings: We have adjusted our forward-looking estimates and target setting multiples for our coverage universe to adjust for renewed near- and long-term expectations following CQ3/19 earnings.
• ZENA (from BUY; $2 TP to NEUTRAL; $0.15 TP): Our target price is based on 4x (from 7x) 2021E Cannabis EBITDA of $60 MM (from $77 MM) and 1x 2020E Propagation EBITDA (unchanged) of $8 MM. We have updated our model to include the effects of ZENA's rights offering, as well as an update on our long-term estimates to properly reflect ZENA's expected cultivation ramp. Our main concern with ZENA remains its debt balance, which will see $67.4 MM come to maturity in June 2020 and $11.9 MM in October 2020. ZENA ended Q3/19 with $27.9 MM in cash and recently completed a rights offering for $20.8 MM. Given the current constrained conditions in the capital markets, we maintain a cautious outlook on ZENA until an incremental announcement is made regarding how the Company expects to either repay or refinance its various near-term debt obligations.
Most of the time they give higher price targets , but with zena they lowerd them ,so they allso don't believe in zena anymore , back too 0,15 and lower !