Organigram: Why I Still Like It

Core Viewpoint - Organigram (NASDAQ:OGI) has shown significant stock performance, increasing 22% since the last analysis, while the broader cannabis market has declined, indicating strong relative performance [1][2] Financial Performance - For fiscal Q3, Organigram reported revenue of C$41.1 million, a 25% increase year-over-year, surpassing expectations of C$38 million [6] - Adjusted EBITDA for Q3 was C$3.5 million, compared to a loss of C$2.9 million a year earlier, indicating a positive turnaround [6] - The company has improved its cash position significantly, reporting C$80.1 million in cash and short-term investments, up 136% from the previous year-end [6] Market Position - Organigram has outperformed many of its peers, with a 42% increase in 2024, while the Global Cannabis Stock Index rose only 5.1% and the Canadian Cannabis LP Index fell 17.5% [2][3] - The company is heavily focused on the adult-use market in Canada, which accounted for 89% of its net revenue, growing 42% year-over-year [6] Analyst Expectations - Analysts have revised their FY25 revenue projections for Organigram from C$165 million to C$176 million, with adjusted EBITDA expectations increasing from C$5 million to C$9 million [7] - The consensus for FY26 adjusted EBITDA has also improved, with estimates rising from C$18 million to C$19 million [7] Valuation Insights - Organigram is currently trading at a small discount to tangible book value at 0.9X, which is considered attractive for a cash-rich and debt-free company [8] - The target price for the end of the year has been adjusted to C$2.45 (US$1.80), reflecting a potential gain of 21% [8] Future Opportunities - Potential favorable changes in Canadian cannabis taxation could benefit the entire sector, including Organigram [9] - There is speculation about a possible acquisition by British American Tobacco, which has shown interest in increasing its stake in Organigram [10]