Village Farms International (VFF) reported its third-quarter results on November 9 before the opening bell.
The company said it has achieved record revenue, margins, and adjusted EBITDA for its Cannabis segment. (See Insiders’ Hot Stocks on TipRanks)
Sales & Earnings
Total sales came in at $72.4 million for the quarter ended September 30, an increase of 68% from $43 million in the prior-year quarter. This includes cannabis sales of $31.2 million from Pure Sunfarms and $41.2 million in produce sales.
The company reported a net income of $0.7 million ($0.01 per share) in Q3 2021, compared to a net income of $0.5 million ($0.01 per share) in Q3 2020.
Pure Sunfarms remained the top-selling dried flower brand in Ontario, Alberta, and British Columbia.
Acquisition of Balanced Health Botanicals
Village Farms CEO Michael DeGiglio said, “Our strong third quarter results were driven by another record performance from our Canadian cannabis business, Pure Sunfarms, as well as a partial quarter’s contribution from the acquisition of Balanced Health Botanicals, and improved results in our Village Farms Fresh Produce business.”
DeGiglio said that Balanced Health not only provides a growing and profitable platform with exceptional cannabis experience for the CBD market opportunity in the United States, but also expansion potential for all cannabinoid products, including high-THC products, as permitted by evolving legislation.
Wall Street’s Take
On November 9, Cantor Fitzgerald analyst Pablo Zuanic upgraded VFF to Buy from Hold and raised its price target to $12.75 (C$15.87). This implies 44.1% upside potential.
Zuanic stated, “Unlike apples, for instance, it seems few can grow quality flower at competitive costs. As domestic peers are forced to pivot away from the everyday low-price segment (most cannot make money there) and resort to buying from producers such as Pure Sun Farms, we think VFF will gain market share in both the domestic-branded and unbranded segments and will likely undercut Canadian peers in the export markets once it gets all the proper permits.”
Overall, consensus on the Street is that VFF is a Strong Buy based on three Buys and one Hold. The average Village Farms International price target of C$17.82 implies 60.3% upside potential to current levels.
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