Rubicon Organics is still a buy, Haywood says

Its fourth quarter results are in the books and Haywood analyst Neal Gilmer has maintained his “Buy” rating on Rubicon Organics (Rubicon Organics Stock Quote, Chart, News, Analysts, Financials TSXV:ROMJ).

On April 1, ROMJ reported its Q4 and fiscal 2024 results. In the fourth quarter, the company posted Adjusted EBITDA of $1.6-million on revenue of $14.2-million, up 42%, year-over-year.

“2024 marked another record year for Rubicon Organics growing 21% year-over-year, dramatically outpacing market growth,” CEO Margaret Brodie said. “Our vape launch, the fastest and widest in our company history, underscores the strength of our industry leading premium brands and our ability to drive growth through reputation and high-quality innovation. Shifting market dynamics are driving a supply shortage in Canada, creating significant opportunities for established operators. At the same time, international markets are increasingly opening up to top Canadian producers. We are excited to accelerate our expansion strategy and meet the growing demand for our premium brands both at home and abroad.”

The analyst summarized the development.

“Rubicon’s fourth quarter results were generally in-line with our expectations and conclude a solid year for the Company,” Gilmer said. “This year, revenue growth will come from increased product availability due to contract grows the Company has entered into while investments into are expected to pressure EBITDA on a short-term basis. Next year is shaping up to be a very strong year with strong revenue and EBITDA growth with the addition of the Hope facility.”

In a research update to clients April 2, the analyst maintained his “Buy” rating and price target of $1.10 on ROMJ, implying a return of 96% at the time of publication.

The analyst thinks the company will post EBITDA of $3.5-million on revenue of $52.1-million in fiscal 2025. He expects EBITDA of $9.5-million on revenue of $65.7-million in fiscal 2026.

“Rubicon continues to have strong market share within the premium segment across its markets. The Company remains prudent in operating expenses with a solid balance sheet. The acquisition of the new facility will help drive continued growth next year. We believe the Company is positioned to establish itself in a strong niche segment of the market.”