Organigram Bounces 11% on Q3 Revenue Beat

Shares of Organigram Holdings, Inc. (OGI) leaped 10.9% on July 13 to close at $2.94 after the company reported robust revenues driven by strong demand and a narrower-than-anticipated loss for the fiscal third quarter of 2021.

Organigram Holdings is a leading Canada-based licensed producer of high-quality medical and recreational cannabis.

Currently, the company has a $0.9 billion market capitalization. Shares of the company have gained 93% over the past year. (See OGI stock charts on TipRanks)

The company reported 31% year-over-year growth in gross revenues to $29.1 million, beating analysts’ expectations of $22.24 million. However, Organigram reported a net loss of C$4 million ($3.20 million) versus a loss of C$89 million in the prior-year period.

Meanwhile, adult-use recreational net revenue increased 40% sequentially and 10% year-on-year. Gross margin improved from the year-ago period driven by higher net revenue and lower cost of sales.

Based on the strong Q2 revenue beat, increased number of retail stores, and lower COVID-19 restrictions, the company now forecasts higher sequential revenues and adjusted gross margins in the fourth quarter versus the current quarter.

OGI’s Chief Strategy Officer, Paolo De Luca, commented, “The ongoing investment in our genetics and cultivation program has yielded some exciting new dried flower products with more genetics and derivative product launches planned for the near term. Sales are trending higher to date in Q4 supported by a strong outlook for the industry as the number of cannabis retail stores continues to grow and existing stores are permitted to re-open their doors to customers.”

Following the earnings results, Oppenheimer analyst Rupesh Parikh assigned a Hold rating to the stock.

Parikh commented, “We remain focused on management’s ability to drive healthier profitability going forward. We continue to believe investors should tread cautiously towards our entire Cannabis coverage universe due primarily to a still difficult competitive backdrop.”

Overall, the stock has a Hold consensus rating based on 1 Buys and 3 Holds. The average Organigram Holdings price target of $3.40 implies 15.7% upside potential from current levels.