Eight Capital initiates Cannabis retailers with 'buy' recommendation

Decibel Cannabis

29/05/2019 11:16

** Eight Capital initiates coverage on three Cannabis
retailers - Alcanna Inc  CLIQ.TO  ("buy," PT: C$9.50), Fire &
Flower Inc  FAF.V  ("buy," PT: C$2.75) and Westleaf Inc  WL.V 
("buy," PT: C$1.10) 
    ** Says the cannabis retail sector could gain increasing
traction in 2019
    ** Supply of cannabis begins to ease, leading to additional
licenses and store openings - Eight Capital
    ** Says commoditization of cannabis could compress wholesale
prices and increase margins for cannabis retailers
    ** Alcanna is transitioning into a growth-oriented liquor
and cannabis retailer, recovering from a declining liquor
business and unsuccessful U.S. expansion - Eight Capital 
    ** Says co could see top-line and EBITDA growth with the
expansion of Wine and Beyond store locations
    ** Brokerage says Fire and Flower is well positioned to
build a leading retail brand
    ** Says co well-funded to reach 71 stores in total by FY
2020 with ~$26 mln of cash in hand and $63 mln of proceeds from
the potential exercise of warrants and options
    ** Westleaf has cultivation and processing facilities in
pipeline and currently three retail stores are in operations -
Eight Capital
    ** Brokerage believes continued roll-out of stores should
generate meaningful revenues and EBITDA in FY 2019 and 2020

 (Reporting By Aniruddha Chakrabarty)
 ((aniruddha.c.thomsonreuters.com@reuters.net))