New Age Beverages (NBEV) bills itself as a “Colorado-based healthy beverage company,” producing a variety of ready-to-drink (RTD) teas, coffees, coconut waters and energy drinks under brand names such as XingTea, XingEnergy, Coco-Libre, and Aspen Pure. But let’s call a spade a spade: Most people investing in New Age Beverages stock these days are probably buying it for the weed.
In September last year, New Age announced plans to begin selling a new line of drinks laced with cannabidiol (CBD), more than tripling its own market cap in the space of a month. Although the stock has come down a bit since, it’s still up roughly 90% over the past year. Investors who’ve put their faith in New Age will now be looking for confirmation that they’ve backed the right horse.
When might they get this confirmation they seek? That’s actually not 100% certain. New Age has not yet named an official date for the release of its Q4 and full-year 2018 earnings. Q3 results came out more than a month ago — Nov. 14 — so New Age’s next update is actually a bit overdue already. That fact is only likely to make investors more anxious to see the Q4 results when they are released.
And what kind of numbers can we expect when the results arrive?
Northland analyst Mike Grondahl, who follows New Age Beverage stock, updated his expectations for the stock’s fiscal fourth quarter. Rating the stock “outperform” and positing an $8 price target on this stock, which currently fetches just $6 and change, Grondahl nonetheless adopted a conservative tone. (To watch Grondahl’s track record, click here)
New Age’s acquisition of Morinda late last year, for example, won’t have had much effect on New Age’s sales or earnings in Q4, in as much as New Age will only have owned Morinda (and its $240 million-a-year revenue stream) for just a few days before New Age closed its books on the quarter.
Nor does Grondahl expect much to have come of New Age’s efforts to secure retailer partnerships for its drinks — at least not yet. New shelf space at retailers doesn’t generally open up for reallocation before March, April or May, notes the analyst, so any progress on that front won’t be felt before Q1 2019 at the earliest — and more likely, Q2. This being the case, Grondahl has ratcheted back his expectations for Q4 2018 revenues by about 12%, to $13.3 million.
2019 could still be a big year for New Age, however. With Morinda in-house, Grondahl is looking for full-year 2019 sales to surge towards $315 million. Assuming $240 million of that comes from Morinda, and the balance from New Age proper, this implies that the core business will grow sales as much as 45% year over year, from the $51.7 million that most analysts believe it produced in 2018. Grondahl further expects New Age to turn profitable this year, breaking even in Q1, and growing steadily to end the year with $0.10 in GAAP earnings.
Now, all we need is for New Age to get a move on and release earnings and confirm that for us.
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