Organigram Has Declined A Lot And Is A Great Deal

Company Performance - Organigram's stock is up 16 4% in 2024, outperforming the New Cannabis Ventures Global Cannabis Stock Index which gained 6 2% [1] - The company reported a 5% decline in Q2 revenue to C$37 6 million, with adjusted EBITDA at -C$1 million, worse than the expected zero [2] - Canadian adult-use revenue rose 21% to C$33 1 million, while international revenue plunged 80$2 2 million [2] - The company has C$71 4 million in cash at the end of Q2, with a tangible book value of C$289 8 million, higher than its market cap of C$237 5 million [2] Financial Outlook - Analysts revised FY24 revenue expectations to C$151 million with adjusted EBITDA of -C$1 million, down from previous estimates of C$178 million and C$13 million respectively [3] - For FY25 and FY26, analysts project revenue of C$165 million and C$188 million, with adjusted EBITDA of C$5 million and C$18 million [3] - The adjusted EBITDA margin for FY26 is projected at 9 6$428 6 million, up 4 4% year-over-year, with Quebec sales soaring 26% to C$61 6 million [4] - High taxation in Canada remains a significant issue for the cannabis industry [4] - The stock has declined 93% since its peak in early 2021 and is down 7 3% over the past year, underperforming the NCV Global Cannabis Index which gained 11 8% [5] Valuation and Strategic Moves - Organigram trades at 0 8X tangible book value, which is better than Canopy Growth and Tilray Brands [6] - British American Tobacco (BTI) is increasing its stake in Organigram at a price higher than the current market price [8] - The company could potentially be acquired, and rescheduling in the United States might boost investor sentiment [8] Portfolio and Peer Comparison - Organigram is the largest position in the model portfolio at 19%, with Village Farms at 15 4% [6] - Since April 19th, Organigram has declined 9 6%, worse than the average decline of other LPs [6]