Currently have a $37.00 target. GLTA
JAMIESON WELLNESS INC.
Q2 Preview: Moving Parts
Jamieson Wellness will report its Q2 results on Thursday, August 3 after
market close. Management will host a conference call at 5:00 p.m. ET; dial-in
number is 1-888-886-7786.
We consider 2023 a transition year for Jamieson, and we believe uncertainty
around the U.S. and China operations is weighing on the stock (JWEL is
down 13% YTD). The U.S. result (youtheory) and H2 guidance for the U.S.
may disproportionately impact—positive or negative—the stock’s initial
reaction.
We are generally bullish on the China opportunity, but see this as a brand-
building year that will see significant sales growth in the country, but little
EBITDA growth. The China business has multiple moving parts, including the
addition of a strategic partner (which now owns 33%), as well as the shift to
acting as distributor in the market. In the U.S., we have little visibility to
results. Customer concentration remains a risk, but Q2 will provide a useful
update, as this is a seasonally relevant quarter.
Sales guidance for Q2 involves up to 3% sales growth for Jamieson Canada,
50%-70% growth for Jamieson China, 35%-45% growth for Strategic
Partners, and -10% to flat for Jamieson International. Youtheory sales
guidance is $40MM-$44MM. Consolidated GM% is expected to be ~34.4%
because of lower margins from youtheory. Note that Health Canada data
shows domestic flu count down over 60% Y/Y, likely forcing JWEL to rely
more on non-immunity products in its domestic market.
Peers have reported positive results thus far, with CHD and USNA each
exceeding consensus sales and EBITDA forecasts. We believe this,
especially USNA’s positive China commentary, has driven JWEL’s
performance over the last week. The table in Exhibit 1 summarizes our
estimates and consensus.