Should You Buy MediPharm Labs Stock Before its Earnings Report?
MediPharm Labs Corp [stock_market_widget type=”inline” symbol=”MEDIF” template=”basic” color=”default”], the Canadian hemp stock, gained over 5% on June 15, 2020. This is on a rebound with net-zero returns since May 19, 2020. This hemp stock still has a negative year to date return at approximately 57%. MediPharm Labs stock is currently trading at CA$1.78 on the TSX with a market cap close to CA$233 million. Since February 2018, MediPharm Labs Corp hemp stock has increased 1.5x from its IPO price of CA$0.70. Should You Buy MediPharm Labs Stock Before its Earnings Report? Although the stock has gained value, we’re not convinced they’re worth a buy.
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MediPharm secures CA$37 million through an institutional investor
In a release dated June 8, MediPharm disclosed a successful closure of private placement with an institutional investor. The average gross process is valued at CA$37, 822,500. Half of these proceeds which are around CA$18.9 million pertains to unsecured convertible notes worth $20.5 million along with a warrant with rights to purchase 3.6 million common shares of this hemp stock.
The remaining half of the proceeds will be held in an escrow account as a subscription receipt. The company carried out an agreement with a licensed Canadian Trust company and appointed it as the subscription receipt agent.
The portion of the gross proceeds held with the trust company will entitle the institutional investor to the same set of rights conferred by the realized half of the proceeds. The balance held in the escrow will be realized only after the satisfactory compliance of Escrow release conditions.
Through this fundraise, the company will have the financial flexibility to focus on its range of Cannabis 2.0 products. The company has also secured multiple global contracts for the supply of cannabis products. MediPharm’s processing capacity is currently close to 100,000 kilograms of dry cannabis flowers per year.
MediPharm upcoming Q1 2020 earnings release
In a press release on June 8, 2020, MediPharm announced that first-quarter 2020 earnings release is scheduled for June 18. The earnings results will be declared before the market opens for trading.
Analysts covering MediPharm expect sales in the March quarter to touch $23.74 million. This indicates year-over-year growth of 42.5%, up from $16.66 million in the prior-year period.
Similar to most marijuana stocks, MediPharm is also reporting a non-GAAP loss. Analysts expect the company’s earnings to fall to -$0.03 per share in 2020, compared to $0.01 in 2019. However, its profitability is expected to increase to $0.14 per share in 2021.
Investors can expect this hemp stock to gain momentum if it manages to beat estimates and provide strong guidance. It is valued at just 2x above sales and is well poised to outperform the broader markets in the second half of 2020. However, we are not convinced that this marijuana stock is a buy and we’ll need to wait to see how their current quarterly revenues shake out before recommending this pot stock.
Should You Buy MediPharm Labs Stock Before its Earnings Report?
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