Mackie Research Initiates Coverage on Four Canadian LPs

Investment Bank Mackie Research has published an extensive industry report, initiating coverage on four Canadian LPs. The 74-page report, “The End of Prohibition – Investing in Canada’s Growing Cannabis Industry,” was written by Greg McLeish, CFA, who joined the firm earlier this year as Director, Equity Research after spending fourteen years as an analyst at GMP Securities.

McLeish sees near-term demand from the recreational market leading to a shortfall in initial supply for the market next year and forecasts a total market of C$6 billion (795mm grams), including 95mm grams for the medical market alone. He expects capacity and demand to come into equilibrium in 2020. His report also discusses the issues of taxation, retail distribution and the need to liberalize the rules surrounding cannabis oils.

Mackie initiated research on a diverse group of LPs, including ABcann Global (TSXV: ABCN) (OTC: ABCCF), Aurora Cannabis (TSX: ACB) (OTC: ACBFF), CanniMed Therapeutics (TSX: CMED) (OTC: CMMDF) and Harvest One Cannabis (TSXV: HVST) (OTC: HRVOF).

Mackie believes ABcann can generate sales of approximately C$102mm in the year ending December 2020 and gave it a price target of C$1.50 based on 10X EV/EBITDA in 2020, discounted at 20%. This represents a potential return of 67% based on the closing price on September 20th.

McLeish projects Aurora Cannabis will produce revenue of approximately C$465mm in the year ending June 2020 and gave it a price target of C$3.80 based on 10X EV/EBITDA in 2020, discounted at 20%. This represents a potential return of 35% based on the closing price on September 20th.

He expects CanniMed to generate sales of approximately C$113mm in the year ending October 2020 and gave it a price target of C$13.80 based on 10X EV/EBITDA in 2020, discounted at 20%. This represents a potential return of 37% based on the closing price on September 20th.

McLeish forecasts Harvest One will produce sales of approximately C$45mm in the year ending June 2020 and gave it a price target of C$1.00 based on 10X EV/EBITDA in 2020, discounted at 30% (due to its earlier stage of development). This represents a potential return of 45% based on the closing price on September 20th.

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Exclusive article by Alan Brochstein, CFA
Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online communities 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email

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