Mar 18, 2019 Kristen Moran

BMO Analysts Give FIRE Stock ‘Market Perform’ Rating

fire stock

BMO Capital Markets initiated coverage of the Supreme Cannabis Company (TSX:FIRE) (OTCQX:SPRWF) today, offering the company a Market Perform rating, with a $2.50 CAD per share price target.  

The target share price represents a 15% premium to FIRE stock’s then-current market price, however, BMO Capital Markets analysts Tamy Chen, CFA, and Peter Sklar, CPA, CA, see the potential for Supreme Cannabis to reach a $3.00 CAD share price with brand traction, accelerating sales, ramping production, and strategic international acquisitions.

The mainstream analysis firm has covered Aurora Cannabis Inc. (TSX:ACB) (NYSE:ACB), Canopy Growth Corp. (TSX:WEED) (NYSE:CGC), and OrganiGram Holdings Inc (TSXV:OGI) (OTCQX:OGRMF), along with other industry giants in the cannabis space, which shows just how far FIRE has come in recent months to be considered among this group. 

Strategic International Acquisitions for FIRE Stock

As mentioned, another reason BMO Capital Markets analysts see the potential for the FIRE stock to reach $3.00 CAD is through strategic international acquisitions. Looking at Supreme Cannabis’s recent international activity, it is evidently on the right path.

In March 2019, the company signed a letter of intent with Malta Enterprises to produce and process medical cannabis in the country. This deal gives Supreme an export route into the European cannabis market. Supreme Cannabis also made a $10 million strategic equity investment to acquire 10% of Medigrow, a licensed producer based in Lesotho, the first country in Africa to legalize cannabis.

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Another factor BMO analysts see affecting FIRE’s stock price is brand traction. The company’s recent partnership with Khalifa Kush Enterprises Canada ULC supports its desire to become a premium recreational brand and provide sustainable margins over the long term.

FIRE Stock Reports Increased Revenue

Supreme Cannabis recently announced its Q2 financial and operational results, which boast a 359% increase in revenue from Q2 2018 ($1.68 million) to Q2 2019 ($7.72 million). This revenue growth highlights the company’s capability to maintain high revenues within the cannabis industry. FIRE stock also strengthened its balance sheet during this quarter, by raising $100 million of gross proceeds through a bought deal offering of 6% unsecured convertible debentures due 2021 and led by GMP Securities L.P. and BMO Capital Markets. 

At 4 pm EDT, FIRE stock was trading at $2.23 CAD on the Toronto Stock Exchange, up $0.05 (+2.29%) and at $1.68 on the OTCQX, up $0.05 (+3.07%).

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