Eight Capital is bullish on WeedMD Inc (OTCMKTS:WDDMF), citing a positive 2019 outlook.
Analysts on Friday gave the Canadian medical cannabis grower a Buy rating and a price target of C$4.50.
Eight Capital issued its note hours after WeedMD released first-quarter earnings, showing a 23% quarter-over-quarter increase in revenue to C$3.3 million. The rating firm had expected C$3.5 million in revenue but blamed the slight miss on a lower average-price-per gram, which was offset by higher-than-expected volumes.
WeedMD sold 793 kilograms of dried cannabis, representing an increase of 46% from the previous quarter. Analysts estimated the company would sell 625 kgs.
WeedMD, based in Aylmer, Ontario, owns and operates two facilities in southwestern Ontario to produce and distribute medical-grade cannabis.
The Aylmer facility houses 26,000 square feet of grow and extraction space on an expandable site across four acres of land, while its 158-acre Strathroy, Ontario facility includes both indoor and outdoor grow capacity. The company on Friday secured Health Canada approval for 27 acres of low-cost, outdoor cultivation at Strathroy.
“Moving forward, the company expects revenue growth to continue throughout the balance of 2019 as its Strathroy site ramps up and its Aylmer extraction facility comes online in mid-summer,” analysts wrote.
The ratings firm also cited WeedMd’s plan to start processing 70,000 kgs annually at the Aylmer plant.
“We believe the company is positioning itself well for the derivatives market in 2020,” Eight Capital wrote.
The company's stock on Friday closed up 1.45% to C$1.39 a share in Toronto.
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