TGOD: Why Analysts Lowered Price Targets in September


Six analysts currently cover The Green Organic Dutchman Holdings (TGOD). The consensus price target for the stock fell from 5.68 Canadian dollars in August to 5.23 Canadian dollars as on September 10, a decrease of 7.9%. TGOD’s stock price closed September 10 at 1.97. The new revised price target represents upside potential of 101.7% over the next 12 months.


What analysts are saying about the stock

The Green Organic Dutchman Holdings had reported its second-quarter earnings on August 13. For the quarter, the company reported revenues of 2.9 million Canadian dollars. Sequentially, the company’s revenue rose 20.4% from 2.41 million in the first quarter. However, its net losses came in at $16.6 million, higher than its first-quarter loss of 14 million. On September 4, Aurora Cannabis (ACB) sold its remaining stake in TGOD for 86.5 million. Higher net losses and Aurora selling its stake in TGOD appear to have prompted analysts to lower their price targets. On September 4, Canaccord Genuity cut its price target from 4.50 Canadian dollars to 2.75.

In October 2018, Canaccord initiated its coverage of TGOD with a speculative “buy” rating. Also, the investment firm gave TGOD a price target of 7.0. Derek Dley of Canaccord commented, “Our target implies 13.4x our 2020 EBITDA estimate of $141 million. We value TGOD at a slight discount to current mid-tier Canadian LP valuations at 15.9x, given the early-stage nature of TGOD’s operations,” as StreetInsider reported.

Dley added, “In our view, TGOD offers investors unique exposure to organic cannabis, as the company is the largest publicly traded LP that is a certified producer of organic cannabis while also offering investors above average international optionality. Importantly, TGOD is well capitalized and, by our estimates, fully funded to achieve our estimates over our forecast period. With the shares trading at 6.6x our 2020 EBITDA estimate, we believe TGOD represents an attractive buying opportunity at current levels.”

However, since these comments, Canaccord has cut its price target four times.

Analyst ratings for TGOD

Although TGOD’s consensus price target has fallen this month, there were no changes in analysts’ ratings from last month. Of the six analysts covering the stock, one analyst has a “strong buy” rating. Two analysts have a “buy” rating. Also, two analysts have given the stock a “hold” rating, and one analyst has given a “sell” rating.

TGOD versus cannabis peers

On September 10, Aurora Cannabis (ACB) had a consensus “buy” rating with a price target of 13.23 Canadian dollars. Aurora is due to report its fourth-quarter earnings tomorrow. Learn more in Aurora Cannabis: What to Expect from Its Q4 Results. Meanwhile, Curaleaf (CURA) and Growth (CGC)(WEED) also have consensus “buy” ratings. Curaleaf has a price target of 18.02 Canadian dollars while Canopy has a price target of 55.73.