Aleafia Health is a vertically integrated and federally licensed Canadian cannabis company offering health and wellness services in Canada and international markets. The company produces various products including oils, capsules, edibles, sublingual stripes, and vapes. It has one of the largest national networks of medical and education centers observed by MDs, nurses, practitioners, and educators spread across three continents. The company recently expanded its adult-use presence in Saskatchewan. Aleafia now sells adult-use products in four provinces which is more than enough to serve 67% of the total population of Canada. Aleafia Cannabis stock has a strong upside but has experienced recent volatility – But is Aleafia Health a Strong Buy before Q4 results?
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Will Aleafia Have a Great Q4?
Aleafia is set to announce its Q4 and 2020 results tomorrow on March 25. However, the company revealed a few details of what people can expect from its Q4 results. A major highlight is the payment of 8% unsecured convertible debentures amounting to $25 million.
The second point to consider is that the company says Q4 of 2020 has been its best quarter by revenue to date. Although Aleafia did not mention numbers, it said that sales surpassed the company’s total order value. But to know the actual numbers, we will have to wait for March 25.
“We expect to have our strongest quarter to date in Q4 2020 as we progress towards significant sequential growth in medical, adult-use, wholesale and international cannabis sales. The strategic path we’ve executed upon, from building out facilities, to receiving three major licences in 2020, to formulating new products, is now bearing fruit. With the introduction of vape cartridges, sublingual strips, and with many more launches to come, the commercialization of our business at scale is truly in full swing. We look forward to continuing to launch dynamic, innovative formats, while greatly expanding our dried flower portfolio,” said Aleafia Health CEO Geoffrey Benic.
There has been a 23% increase in the number of customers using Aleafia’s health product. The company has also increased its wholesale facilities after Q3 results, and thus expects a gradual increase in the net revenue. Adjusted EBITDA for Q3 was a loss of $5.7 million and there was a net loss of $19.8 million in the September quarter. Q4 should see a massive turnaround in the company’s fortunes.
Upbeat 2021 for Aleafia Health
Medical cannabis revenue for Aleafia continues to grow with numbers in January (traditionally a month with slower demand) indicating a fourth consecutive monthly record.
Aleafia has also said that adult-use cannabis orders are growing. In fact, the company said, “In the first month of 2021, adult-use purchase orders have nearly surpassed the total order value in Q4 2020, driven in part by sales of an innovative product, Kin Slips sublingual strips. Shipments to additional provincial markets are also expected to commence in the near term.”
In February, Aleafia announced that Emblem Cannabis, its wholly-owned subsidiary, received a Health Canada Processing Licence for its new distribution centre (DC). The DC will enable immediate expansion of same-day delivery service, and eventual direct-to-retailer cannabis distribution for Aleafia.
Bottom Line: Is Aleafia Health a Strong Buy Before Q4 Results?
The current consensus rating of the stock is ‘buy’ and it is expected that this will remain the same in the short-term. The beta for the stock is high at 1.46 but it’s not bad for a company with a market capitalization of $218 million and one that is part of a volatile industry. The stock is currently trading at CA$0.66 and analysts have given it a target of CA$1.1. That’s an upside of 67%.
Aleafia traded at CA$0.75 on February 25 and has gone through a severe period of volatility since then. The stock is a good momentum play and investors with a higher risk appetite should dig into the stock, especially if they expect stellar results in Q4. Aleafia might be the marijuana stock to buy today for some quick gains before Q4 results.
Aleafia Health: Strong Buy Before Q4 Results?
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