OGI Raised to Buy at Stifel GMP; Price Target Kept at C$1.50Organigram Holdings Raised to Buy at Stifel GMP Following Improved FQ1 Results; Price Target Kept at C$1.50 2023-01-13 09:36:29 AM ET (MT Newswires)
09:36 AM EST, 01/13/2023 (MT Newswires) -- Stifel GMP on Friday raised its rating on the shares of Organigram Holdings (OGI.TO) to buy from hold while leaving its price target unchanged at C$1.50 after the cannabis producer reported better than expected fiscal first-quarter results.
"OGI reported strong Q1FY23 results that beat profitability expectations with meaningful cash generation, the first time in over 3 years and ahead of its late-FY23 guidance established at the end of Nov. 2022," analyst Andrew Partheniou wrote. "More impressively, this was done despite being impacted by the market-wide disruption in ON and while building inventory after expanding production in its Moncton facility from 45 to 85 tonnes. Going forward, we welcome managements' potentially conservative guidance of stable gross margin as distressed competitors may drive price compression, offsetting OGI's future scale and efficiency gains across its infrastructure. Combined with strong cost controls and sales growth likely H2FY23-weighted as favourable seasonality meets the Lac-Superieur expansion (doubling) coming online, we expect OGI to sustainably demonstrate profitability. Given an industry that is starved for profitability, we believe OGI's bright outlook could attract fund flows, re-rating shares. As a result, we upgrade our rating to BUY."