Following “strong” third-quarter results that exhibited its “recurring ability to build market-leading brands,” a “path to profitability [is] becoming clearer” for Indiva Ltd. (NDVA-X), according to Echelon Partners analyst Andrew Semple.
Also touting the emergence of a more “manageable” balance sheet, he raised his recommendation for the London, Ont.-based producer of cannabis edibles to “speculative buy” from “hold” previously.
“Our decision to upgrade the stock to a Speculative Buy rating is the result of: 1) improved financial forecasts (and DCF valuation) while still maintaining a degree of conservatism relative to management’s internal expectations, 2) an improved risk profile with a near term liquidity gap in our model now plugged, and 3) ahead of potential material catalysts for Canadian LPs and edibles manufacturers specifically,” said Mr. Semple. “In addition, since we moved Indiva to a Hold rating, its shares have declined by 27 per cent. We view the risk/reward trade-off to now be much improved at current share price levels, and with demonstrated operational and balance sheet improvements. We believe it is an opportune time for investors to consider adding to positions.”
Seeing signs of improved liquidity, Mr. Semple, currently the lone analyst covering Indiva, raised his target for its shares by 3 cents to 13 cents, representing a total return of 100 per cent to its current price.