Delta 9 Cannabis Inc has provided positive guidance on its revenue forecast for the three-months to September 30, 2021, based on preliminary results.
The Winnipeg, Manitoba-based vertically integrated cannabis company anticipates revenue for the three-month period ending September 30, 2021, to be at between $15.1 million and $15.4 million, compared with $13.1 million for the same period a year earlier.
In addition, Delta 9 expects to chalk up revenue for the nine-month period ending September 30, 2021, between $45 million and $45.3 million, compared with $37.9 million for the same nine-month period a year earlier.
The preliminary estimated financial results have been prepared by the firm’s management.
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Meanwhile, Research Capital Corporation maintained its 'Buy' rating on the stock with an unchanged target price of $1.00 for Delta 9 after it provided its fresh guidance. Delta 9 stock is currently trading around C$39 in Toronto.
"We view the guidance to be neutral to our investment thesis, which is primarily based on Delta 9’s retail expansion strategy with a focus on prudent capital allocation. We are not changing our estimates at this stage, as we are waiting for more details on financial metrics such as revenue breakdown, profitability, and cash burn," said the Research Capital analyst note.
"We believe that the expansion of Delta 9’s retail footprint and wholesale revenue generation beyond Manitoba will be the key triggers for Delta 9’s share price. Margin improvement driven by Delta 9’s focus on ancillary sales, incremental sales by data sharing and premium shelf space agreements with LPs may lead to an expansion of valuation multiples."
The analysts said the "sustainability of Delta 9’s market share in retail and wholesale segments" will be a "key catalyst" for the stock price over the long-term.
Delta 9 will release third-quarter results before the market opens on November 15, 2021. A news release on the financials will be issued on the same day before the stock market opens. This will be followed by a conference call the same morning, pre-market.
The conference call will be hosted at 9:00 am Eastern Time by CEO John Arbuthnot, and CFO Jim Lawson, followed by a question-and-answer period.
The Dial-in number is 1-888-886-7786, while the replay number is 1-877-674-6060.
The replay is available until 12.00 midnight ET on November 15, 2022. The replay passcode is 992950 #
The preliminary estimated revenue figures are subject to the completion of the company's financial closing procedures.
Delta 9 sells products through its wholesale and retail sales channels and markets its cannabis ‘Grow Pods’ to other businesses. The firm’s wholly owned subsidiary, Delta 9 Bio-Tech Inc., is a licensed producer of medical and recreational cannabis and operates an 80,000-square-foot production facility in Winnipeg, Manitoba. Delta 9 owns and operates a chain of retail stores under the Delta 9 Cannabis Store brand.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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