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Things Are Looking Up for Organigram In Fiscal 2023

• Management expects the Company:
  • to increase its revenue in FY 2023;
  • to achieve similar adjusted gross margin rates throughout FY 2023;
  • to maintain positive Adjusted EBITDA throughout FY 2023; and
  • to generate positive free cash flows by the end of calendar 2023.
• Wall Street analysts (15) forecast:
  • an average 12-month stock price increase of 131% from its March 13th closing price of $0.65.

About Organigram Holdings Inc.

Organigram Holdings Inc., (Nasdaq: OGI) (TSX: OGI):

• is the parent company of Organigram Inc. and Laurentian Organic Inc., licensed producers (LPs) of cannabis and cannabis-derived products in Canada, and The Edibles and Infusions Corporation, a licensed manufacturer of cannabis-infused soft chews and candy in Canada;
• is focused on producing high-quality, indoor-grown cannabis for patients and adult recreational consumers in Canada, as well as developing international business partnerships to extend the Company’s global footprint;
• its primary indoor growing facility is in Moncton, New Brunswick; its premium hash production and craft cultivation facility is in Lac-Supérieur, Quebec and its edibles manufacturing facility is in Winnipeg, Manitoba;
• has developed a portfolio of adult-use recreational cannabis brands including Edison, Big Bag o’ Buds, SHRED, Monjour, Holy Mountain, Trailblazer, Tremblant Cannabis, and artisanal craft brand, Laurentian; and
• has a multi-year agreement to supply dried flower to one of Israel’s largest and most established medical cannabis producers, Canndoc Ltd., a subsidiary of InterCure Ltd. and  holds international cultivation and distribution agreements in the European Union and Canada.
• Visit Organigrams 43-page Investors Presentation for more detailed information.

Latest Financial Highlights

The Company's Q1, 2023, financial report, ended November 30th, 2022, (see summary here) elicited the following comments from its senior executives:

• Beena Goldenberg, Chief Executive Officer, said:
  • “...we achieved:
    • a record harvest,
    • the lowest cost of cultivation in the history of the Company and
    • maintained our market position and
  • we are confident our disciplined approach to operations and innovation will drive further success in the rest of the year.”
• Derrick West, Chief Financial Officer, said:
  • “...we achieved:
    • the highest adjusted gross margin in the Company's history,
    • continued the trend of positive Adjusted EBITDA and
    • delivered positive net income and cash flow.
  • With...continuous improvements in automation and cultivation, we have built a long-term platform to serve increasing market demands and generate value.”

Management's Fiscal 2023 Outlook

• Net Revenue
  • expects Fiscal 2023 revenue to be higher than that of Fiscal 2022...largely due to:
    • ongoing sales momentum;
    • stronger forecasted market growth;
    • the Company's expanded product line in multiple segments;
    • greater capacity to meet demand at the Moncton Campus;
    • increased throughput at the Winnipeg facility;
    • contributions from the Lac-Supérieur facility; and
    • anticipated continuation of shipments to Canndoc in Israel and Cannatrek and Medcan in Australia
• Adjusted Gross Margins
  • expects it will be able to achieve similar adjusted gross margin rates throughout Fiscal 2023 with further cost-saving initiatives being put into place to help offset anticipated price compression and based on the following sales mix opportunities:
    • international sales, which have historically attracted higher margins and are expected to represent a greater proportion of the Company’s revenue;
    • sales from the Holy Mountain brand, which will include several product categories, in a number of higher margin formats with national distribution on most SKUs;
    • the launch of new products across different derivative categories with expected attractive long-term margin profiles; and
    • the larger volume of higher margin sales expected from the Lac-Supérieur Facility, achievable from the increased capacity post-construction.
• Adjusted EBITDA
  • expects to maintain positive Adjusted EBITDA throughout Fiscal 2023.
• Cash Flow
  • expects to generate positive free cash flows by the end of calendar 2023.

Stock Performance

Organigram's stock price declined 55% in 2022 which compared favorably with the performance of the other 4 constituents in the munKNEE Canadian Cannabis LPs Index which declined 67% during the same period. The stock remains weak, having declined 16.7% as of March 10th which is slightly worse than the14.5% decline experienced by the Index.

Stock Price Forecast

According to 15 stock analysts, the average 12-month stock price forecast for OGI stock is $1.50, representing an increase of 131% from its March 13th closing price of $0.65. The lowest target is $0.95 and the highest is $2.47. On average, analysts rate OGI stock as a buy which means that analysts believe this stock is likely to outperform the market over the next twelve months.

Conclusion

This article is not a recommendation to buy or sell the stock of Organigram (do your own due diligence) but management's optimism as to what 2023 holds for the Company and the consensus forecast by 15 Wall Street analysts of a 131% increase in the Company's stock price over the next 12 months suggests that things are, indeed, looking up for Organigram in Fiscal 2023.

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