Is Neptune Wellness Stock a Strong Buy?
With wider acceptance around the world, the cannabis industry is now growing at a fast pace. As an investor, if you are in search of the ‘one’ cannabis stock, you could consider Neptune Wellness Solutions Inc. (NASDAQ: NEPT). But, is Neptune Wellness Stock a Strong Buy?
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The Canadian giant is a diversified and fully integrated health and wellness company specializing in plant-based products, as well as cannabis and industrial hemp extraction. After achieving the milestone of over 300% surge in its yearly revenues, it is currently one of the best-performing cannabis stocks available in the market.
Neptune’s Staggering Revenue Growth
The pandemic that influenced country-wide lockdowns had severely impacted revenues of almost all industries around the globe. The marijuana industry was no exception where even the biggest names had to succumb to piles of losses. Even in those challenging times, Neptune Wellness produced an exceptional performance.
The first quarter of the fiscal year 2021 proved to be a turning point for the company where its revenues quadrupled to more than $21.3 million. This rising trend continued in the second quarter as well where revenues rose by 155% compared to Q1 and a massive 340% compared to the same period of last year.
Also, owing to the increased volume in operations and operational efficiencies achieved, the company saw plenty of improvement in its gross margins by the end of the first quarter. However, as a result of all the new strategic investments made, gross margin decreased by 16% in the following quarter.
Additionally, the company is boasting purchase orders amounting to $100 million which should drive top-line numbers to record levels.
Smooth Transitions for Neptune Wellness
Neptune Wellness noticed the growing profits in the retail sector, and the management decided to slowly transition itself towards consumer packaged products and branded products segment from the hemp and cannabis extraction segment. A glance into its recent revenues says this move from B2B to B2C form of business has benefited the company tremendously.
As it looks to press home the advantage, Neptune Wellness is now ready to expand in the adult-use cannabis market and global hemp market. For capturing the market it needs to attain greater customer appeal and therefore is now focusing on developing unique product offerings as per consumer preference.
The company believes its in-house brand Mood Ring™ is an affordable, sustainable, and premium cannabis products range that can very well satisfy the consumers’ demand. Recently, it shipped the first commercial batch of Mood Ring™ Hashish to the British Columbia region. Prior to this, it has also shipped Mood Ring™ High CBD Oil and High CBD Capsules.
Neptune Wellness is trying hard to see a positive-EBITDA quarter and it seems in the company’s third-quarter financials that is coming up this month, there will be another quarter of staggering high revenues. But does this make Neptune Stock a buy?
Neptune’s Growth Trajectory
Neptune Wellness is aiming to become a global cannabis market leader and has taken a string of strategic moves to strengthen its position across the globe. One of its most notable moves is partnering with The Kraft Heinz Company, which is one of the world’s leading dealers in consumer goods.
This move is very special since it marks the company’s first international deal outside the North American region into the newly growing markets of India, Vietnam, the Caribbean Islands, and Latin America. This deal also gave Neptune wellness access to more than 2.1 billion people. Following this move, the company has shipped its products several times in different regions of America and Canada – so this deal with Kraft Heinz might just be the golden key.
Bottom Line: Is Neptune Wellness Stock a Strong Buy?
Neptune Wellness has positioned itself as one of the best performing cannabis stocks in the cannabis industry. However, one must remember the company is a little short in cash and may resort to raising more capital which can possibly dilute shareholder value.
Still, Neptune’s recent strategies prove that the company knows what it is doing. The stock is currently trading at $3.53, and analysts have given it a target of $4.75 which is an upside of almost 35%. This will make a good addition to your hemp stock portfolio.
Is Neptune Wellness Stock a Strong Buy?
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