Charlotte's Web Holdings Inc T.CWEB

Why a sharp CWEB rebound is coming

[GarlicToast]

In June, Charlotte's Web closed its acquisition of Abacus Health Products, a company focused on creating CBD-based over-the-counter topical health products. Abacus Health's topical creams are being sold in 12,000 pharmacies across the U.S. and have the recommendations of over 16,500 health practitioners.

Due to pharmacies' essential nature, it is unlikely Abacus Health has been materially affected by COVID-19 as has Charlotte's Web. Last year, Abacus Health recognized revenue of $15.5 million, representing 82% year-over-year growth from 2018. Together, Charlotte's Web and Abacus Health now have a 35% combined market share in the food/drug/hemp CBD industry.

As the U.S. and Canada begin opening up, I think the demand for Charlotte's Web's products will return. The company recorded impressive 29.4% year-over-year growth in its e-commerce sales for the quarter ending March 31. Now, as retail stores reopen, Charlotte's Web is forecasting 10% to 20% revenue growth for fiscal-year 2020 without accounting for its Abacus Health acquisition. That's about $105 million to $115 million in revenue, which is fantastic for a company with a market cap of just $500 million.

In addition, shareholders should be relieved to hear that Charlotte's Web predicts it will break even this year in terms of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). Last year, the company recorded more than a 33% reduction in cost per milligram of CBD produced, and management expects further cost savings this year.

https://www.fool.com/investing/2020/07/21/why-is-everyone-talking-about-charlottes-web-stock.aspx