Harvest Health and Recreation Inc (HARV)

[JohnCM]

Cannabis Investor

Robert Fagan, an analyst at Stifel announced this week in a research update to clients that he has cut his price target on shares of Harvest Health. The analyst cited M&A troubles as the leading factor but maintained his ‘Buy’ rating on HARV stock.

Fagan further clarified his reasoning by referencing court documents filed by Harvest indicated that the company is intending to terminate its planned acquisition of Falcon International. Harvest is also seeking a $50 million loan repayment.

“HARV has historically been one of the most active M&A players amongst its MSO peers, and with a Pro-forma cash position estimated at ~$150m (incl. Falcon repayment), we believe the company is well-positioned to continue this strategy. However, with two of HARV’s sizable M&A deals now subject to restructuring or potential termination, in our view this clouds somewhat our visibility on the evolution of the company’s platform,” stated Fagan.

Fagan is now forecasting that Harvest Health will produce fiscal 2019 revenue of $120 million and EBITDA of negative $48.2 million. The analyst does anticipate that the company’s financial position will improve in fiscal 2020 and projects EBITDA of positive $69.8 million on revenue of $469.2 million.

As such, the analyst announced that he has slashed his price target on HARV stock from $10 to $7.50 per share. With shares of Harvest Health closing today’s trading session down 3.69% at $3.92 per share, the new price target implies a potential upside of 91.33% from today’s close.