Agrify Corp: Overlooked, Newly Listed Pot Stock Reports Record Q2 Results

Agrify Stock Up 255% Since June; Poised for More Growth

In the crowded world of underperforming U.S. cannabis stocks, it’s nice to find one that’s doing everything right. Newly listed Agrify Corp (NASDAQ:AGFY) is an excellent marijuana company that recently reported record second-quarter results and said it expects to hit the upper target of its full-year revenue guidance.

Agrify has recently signed substantial deals with a few new customers. It has also expanded and enhanced partnerships with existing customers, including:

  • A $3.5-million agreement to help one customer triple its marijuana flower production in Nevada
  • An up-to-$2.5-million contract to complete the construction of a 25,000- square-foot expansion for a customer in Denver, CO
  • A $12.0-million contract with a Nevada company for the build-out of a 12,400-square-foot facility and an additional five years of software-as-a-service (SaaS) revenue

This helps explain why Agrify stock is up by:

  • 108% over the last month
  • 253% over the last three months
  • 118% over the last six months

Strong gains indeed, and Wall Street sees brighter days ahead. Of the analysts providing a 12-month price target for AGFY stock, their average price target is $34.33, which points to upside of 16%.

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An analyst at Maxim Group, LLC is even more bullish on Agrify stock after Agrify Corp reported its second-quarter results. The analyst hiked his price target from $22.00 to $40.00, which suggests potential gains of 32.5%.

Chart courtesy of StockCharts.com

AGFY Stock Overview

Agrify helps its customers grow cannabis. The Billerica, MA-based company develops advanced hardware and software for the indoor agricultural sector. (Source: “About Us,” Agrify Corp, last accessed August 26, 2021.)

While the company’s technology could be great for growing high-value vegetables and fruits, it’s perfect for the blossoming marijuana industry.

The company uses data, science, and technology to help cultivators grow high-quality, consistent, and profitable crops. The company also provides consulting, engineering, security, and construction solutions.

Agrify Corp’s business model includes substantial sales of its Vertical Farming Units (VFUs), as well as recurring SaaS revenues from its “Agrify Insights” software.

Agrify Insights works with the company’s VFUs and container farms, allowing users to automate and optimize grow operations of all sizes. The software calculates the optimum planting schedule and plant movements based on the number of days and environmental conditions that users specify for each grow phase.

Multi-Year R&D Partnership With Curaleaf

In July, Agrify announced that it had formed a long-term research and development partnership with Curaleaf Holdings Inc (CNSX:CURA, OTCMKTS:CURLF). (Source: “Agrify Enters Into Multi-Year Vertical Farming Research and Development Partnership With Curaleaf,” Agrify Corp, July 6, 2021.)

Curaleaf is one of the largest multistate marijuana operators in the U.S. and the largest vertically integrated cannabis company in Europe (as Curaleaf International).

The research will focus on evaluating the impact of certain environmental conditions created and controlled by Agrify’s VFUs and the Agrify Insights software on harvest yields, plant terpene profiles, and flavonoid concentrations.

Agrify Corp will also explore and analyze techniques to enhance the aesthetic appeal, aroma, and overall chemical profile of cannabis flower.

Agreement With Bud & Mary Cultivation

In mid-August, the company announced a definitive agreement with its first “Agrify Total Turn-Key Solution” (Agrify TTK Solution) customer, Bud & Mary Cultivation, Inc. (Source: “Agrify Announces Record Second Quarter 2021 Financial Results,” Agrify Corp, August 12, 2021.)

The deal could generate up to $280.0 million in revenue.

Partnership With True House Expected to Generate $45.3 Million

Also in mid-August, Agrify announced that it had signed a definitive agreement with its second Agrify TTK Solution customer, True House Cannabis LLC. (Source: “Agrify Announces Second TTK Partnership with True House Cannabis LLC,” Agrify Corp, August 11, 2021.)

Agrify will help True House build out its 22,000-square-foot facility and install 159 VFUs, along with integrated catwalks, integrated grow racks, and pest mitigation solutions.

Agrify Corp will provide senior financing of up to $7.0 million to fund the construction of the facility. That loan is expected to be repaid within 30 months after the first commercial production at the facility.

On top of that, Agrify will receive fixed SaaS revenue from True House’s use of the Agrify Insights software, as well as additional production-based fees and brand licensing fees.

The deal is expected to generate up to $45.3 million in revenue over 10 years.

Record Q2 Results

For the second quarter ended June 30, Agrify announced that its revenue increased by 203% year-over-year and 69% sequentially to a record $11.8 million. (Source: Agrify Corp, August 12, 2021, op. cit.)

The company’s new bookings were a record $30.7 million. Its total backlog increased to $101.1 million, from $82.2 million at the end of the previous quarter.

The company reported a second-quarter net loss of $5.6 million, compared to a net loss of $2.4 million in the same prior-year period.

Raymond Chang, Agrify Corp’s CEO, commented, “At the beginning of the year, we set out to achieve $40 million in top-line revenue, secure a partnership with a major [management services organization], and launch our latest technology, VFU 3.6.” (Source: Ibid.)

He continued, “I am proud to report that we have already exceeded these goals, and we are well on our way to realizing our expanded full year 2021 revenue guidance of $48-$50 million.”

Analyst Take

What’s not to love about Agrify stock? The company has been reporting record financial results, providing strong guidance, expanding business relationships, and signing up new customers.

Thanks to record first- and second-quarter results, Agrify Corp is on track to achieve the upper target of its previously disclosed total revenue guidance of $48.0 to $50.0 million for 2021.

The first half of the year has been monumental for Agrify, but the second half could be even more transformational for AGFY stock.