Mackie Research raised its price target for Organigram Holdings (TSX:OGI) to $5 from $4 after the company completed a $57.5-million offering of units at a price of $3.50 a unit. The stock closed at $3.70 on Dec. 18.
Analyst Greg McLeish writes that Organigram intends to use 80% of the net proceeds to build a new 255,000-square-foot cannabis production facility that will add 40,000 kg of incremental capacity and increase the company’s total production space to 429,000 square feet.
The balance of the net proceeds will be used for working capital purposes and to spearhead international business development opportunities.
Mr. McLeish said the company’s pro-forma cash position of $88-million would allow management to continue with its capital expansion plans, pursue strategic acquisitions and address potential working capital requirements.
At the Aug. 31, 2017 fiscal yearend, Organigram had 7,404 active medical marijuana patients, up 142% year-over-year. “This positive trend has continued into fiscal 2018 and as of Dec. 1, 2017, the company had surpassed 10,000 active registered patients,” he added.
