On Thursday, Roth/MKM adjusted its outlook on Flora Growth Corp. (NASDAQ:FLGC), a player in the cannabis industry, by reducing its price target to $6.00 from the previous $7.00. Despite this change, the firm has decided to maintain its Buy rating on the stock. The adjustment comes as Flora Growth continues its strategic pivot away from Colombian cultivation towards potentially more lucrative markets in the United States and Europe.
According to the firm, Flora Growth has achieved significant progress since shifting its focus. The company's various divisions are reportedly nearing or achieving adjusted EBITDA profitability. This milestone is a testament to the company's efforts to become a more efficient and streamlined organization. The completion of legacy goodwill impairments is also seen as a symbolic end to Flora's past strategies, cementing its commitment to this new direction.
The firm's analyst highlighted Flora Growth's early and strategic focus on the German market, which began with medical sales in 2017 and was further solidified by the 2022 acquisition of FGH. This move is expected to place Flora in a favorable position to take advantage of legislative changes in the region.
Roth/MKM's reiteration of the Buy rating reflects their confidence in Flora Growth's strategic realignment and its potential for profitability. The reduction in the price target to $6.00 aligns with the company's current performance and market position, as it continues to navigate the evolving landscape of the cannabis industry.
InvestingPro Insights
As Flora Growth Corp. (NASDAQ:FLGC) embarks on its strategic shift, real-time data from InvestingPro provides a nuanced picture of the company's financial health and market performance. With an adjusted market cap of $16.99 million, Flora Growth is navigating the cannabis industry's challenging terrain. Despite a negative P/E ratio over the last twelve months as of Q4 2023, the company has shown an impressive revenue growth of 127.75%, indicating potential for future profitability as it continues to refine its business strategy.
InvestingPro Tips highlight that Flora Growth holds more cash than debt on its balance sheet and analysts expect both net income and sales growth in the current year, which may reassure investors looking at long-term prospects. However, the company is also quickly burning through cash and has been experiencing high price volatility, a factor that risk-averse investors might consider. On a positive note, the stock is trading at a low revenue valuation multiple, which could signal a buying opportunity for value investors.
For readers looking to dive deeper into Flora Growth's financials and market predictions, InvestingPro offers additional insights and metrics. There are more than 15 InvestingPro Tips available, which can be accessed by visiting https://www.investing.com/pro/FLGC. As an added incentive, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking a wealth of information to inform your investment decisions.
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