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Medipharm Labs Corp T.LABS

Alternate Symbol(s):  MEDIF

MediPharm Labs Corp. is a Canada-based full-service pharmaceutical company. The Company specializes in the development and manufacture of purified, pharmaceutical-quality cannabis concentrates, active pharmaceutical ingredients (API) and advanced derivative products. Through its wholesale and white label platforms, the Company formulates, develops (including through sensory testing), processes, packages and distributes cannabis extracts and advanced cannabinoid-based products to domestic and international markets. It also provides GMP flower sourcing, packaging, and distribution services for select international clients. In addition, it cultivates cannabis to sell as dried flower, pre-roll and other cannabis products for the adult use and medical markets. It also sells metered dose inhalers and aerosol sublingual sprays. Through Harvest Medicine, it provides clinic services to Canadian patients requiring medical cannabis education and prescriptions.


TSX:LABS - Post by User

Post by subaru1ion Jun 01, 2023 10:46am
157 Views
Post# 35474768

LABS future stock price with an Epidiolex exclusive using

LABS future stock price with an Epidiolex exclusive using valuation model of Pf=EPS x P/E where Pf is future stock price, EPS is earnings per share driven LABS profit margin multiplied by sales and divided by number of shares outstanding.  P/E ratio is the amount an investor is willing to pay today for one share for each dollar of future earnings.  The P/E ratio is usually derived from historical data representing the segment that the company operates in and it's rate of earnings growth.  A mature company like Ford or Unilever may have a P/E ratio of around 5.  NVIDIA's P/E ratio has changed because it has a new avenue of revenue growth within the realm of artificial intelligence based hardware sales.   A newer company with non-linear growth rates in it's earnings could have a P/E from 20 to 30.   So let's start.   

1) From Q4, '22 CC, LABS referenced annual sales of Epidiolex at around $900 million per year
2) From Q1, '23 CC, LABS referenced their profit margin to be, (gross margins 10 to 15%)
3) Share outstanding, 390.1 million
4) From Q4, '23, LABS referenced growth rate of about 20% (not including success on over 20 clinical trials currently in their pipeline)

EPS on Epidiolex
$900 million x 10% (not 15%) = $ 90 million
$90 million / 390.1 million shares = $.23 EPS

P/E
Using a 20% growth rate, higher than normal compared to their established pharmaceutical peers, I will use a more aggressive P/E ratio of 15 so as not to reflect any hyper growth and a higher P/E beyond 15

Pf for LABS stock price

Pf= .23 x 15 = $3.45 (not including $.20 per share in cash on their books)

So using the standard approach of a valuation model, LABS target stock price is over $3 per share with the Epidiolex deal.  

This should only be used as a guide because investors may have a higher tolerance for risk and looking for growth opportunities which could push the P/E ratio to 20+.  



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