Citing "increasing evidence that the worst COVID-related headwinds impacting growth are beginning to fade," Raymond James analyst Steve Hansen raised his rating for Enwave Corp. in a research note released Tuesday.
On Aug. 28, the Vancouver-based company reported revenue for the second quarter of $6-million, down 40.5 per cent year-over-year and below the projections of both Mr. Hansen and the Street ($7.5-million and $7.4-million, respectively). He attributed the miss due largely to lower-than-anticipated sales for its subsidiary NutraDried Food Co.
However, Mr. Hansen expects a rebound in NutraDried after it suffered through a period of weak retail results due to the pandemic, noting it recently launched a promotional campaign at Costco "designed to accelerate sell-through, work down elevated inventory, and free up associated capital.
"While the 1-month promotion carries a more significant trade discount versus past promotions, we view it as a good opportunity to bolster brand awareness, reduce aging inventory, improve plant fluidity, and bolster cash," he said.
Mr. Hansen also emphasized Enwave maintains a "robust" balance sheet with $15.6-million in cash and no debt, which he sees providing "significant flexibility to scale as demand recovers."
Moving its stock to "outperform" from "market perform," he kept a target of $1.20 per share.
The average on the Street is $1.45.
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