MariMed Stock: Recent Sell-Off Means This Pot Stock Could More Than Double

MariMed Stock: Recent Sell-Off Means This Pot Stock Could More Than Double

Why MRMD Stock Is Set to Climb

In 2012, Washington and Colorado became the first states in the U.S. to legalize recreational marijuana. A lot has changed over the last decade, with a total of 21 U.S. states legalizing recreational cannabis.

That said, little has changed in terms of legalization at the federal level, and that has led to ongoing uncertainty in the U.S. marijuana sector. Toss in fears of an upcoming recession, which has been dragging the entire stock market lower, and cannabis stocks are having a tough go of it these days.

On the plus side, there are some amazing U.S. pot stocks trading at more attractive prices than at the start of 2022. Moreover, their outlooks for 2023 are robust.

MariMed Inc (CNSX:MRMD, OTCMKTS:MRMD) is one of the most compelling and overlooked micro-cap pot stocks.

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For 2020, the company reported record fourth-quarter and full-year financial results. In 2021, MariMed Inc exceeded management’s guidance, with its revenue soaring by 139% that year. In 2022, the company reported great results for the first three quarters, and it expects to report terrific results for the fourth quarter and full year.

MariMed Inc has been opening new dispensaries, launching new products, and improving its liquidity and capital resources. It plans to open several new dispensaries in 2023, which should help juice its revenues and earnings.

As of this writing, the company has a market cap of $128.9 million. Thanks to a slew of new developments, MariMed Inc expects its annual revenues to grow significantly over the coming years.

This explains why even conservative Wall Street is bullish on MRMD stock. Analysts provided a 12-month share-price target in the range of $0.98 to $1.10, which points to potential upside in the range of 157% to 190%.

Chart courtesy of StockCharts.com

MariMed Inc Overview

Norwood, MA-based MariMed is one of the largest multistate seed-to-sale marijuana companies in the U.S. It operates in Delaware, Illinois, Maryland, Massachusetts, Missouri, and Nevada. (Source: “Investor Presentation: November 2022,” MariMed Inc, last accessed January 3, 2023.)

MariMed offers a full range of cannabis products, which are sold in its own dispensaries and in thousands of other dispensaries. In the U.S., the company runs eight dispensaries and has three more under development. The company also has five cultivation and production facilities.

MariMed Inc’s top-selling house brands include the award-winning “Betty’s Eddies” (medicated fruit chews that are vegan-friendly), “Kalm Fusion” (chewable tablets), “Nature’s Heritage” (premium cannabis strains), and “Bubby’s Baked” (baked edibles).

MariMed Inc also has a number of brand partnerships, including “Binske,” “Emack & Bolio’s,” and “Tropizen Pique.”

The company continues to build its portfolio of consumer brands and license its products in U.S. states and territories where recreational marijuana is legal, including Maine and Puerto Rico. MariMed Inc also has global expansion plans.

MariMed Inc recently announced the formation of a separate division, MariMed Hemp, which will focus on the development of industrial hemp-derived cannabidiol (CBD) products.

In April 2019, the company acquired 70% of MediTaurus LLC. That company’s “Florance” brand of CBD products has an established presence in the U.S., U.K., and Europe with online distributors, wholesalers, pharmacies, and physicians.

Another Quarter of Revenue & Earnings Growth

For the third quarter ended September 30, 2022, MariMed announced that its revenue inched up by 2.1% year-over-year to $33.9 million. (Source: “MariMed Reports Third Quarter 2022 Earnings,” MariMed Inc, November 7, 2022.)

The company’s third-quarter net income advanced 33.9% year-over-year to $2.7 million, or $0.01 per share. MariMed Inc’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in the third quarter of 2022 came in at $8.6 million, representing the company’s 11th consecutive quarter of positive adjusted EBITDA. Its adjusted EBITDA margin in the quarter was 25.4%.

Bob Fireman, MariMed Inc’s CEO at the time of the third-quarter earnings report, said, “I am pleased to report we grew revenue both year-over-year and sequentially, despite continued headwinds facing the entire industry.” (Source: Ibid.)

He continued, “MariMed continues to outperform these industry dynamics on the strength of our outstanding retail and wholesale operations, high quality and innovative product mix, and exceptional customer service.”

For full-year 2022, MariMed Inc expects to report:

  • Revenues in the range of $132.0 to $35.0 million, up from $121.5 million in 2021
  • Gross margin in the range of 48% to 49%
  • Adjusted EBITDA in the range of $32.0 to $35.0 million, versus $43.1 million in 2021

Jon Levine, MariMed Inc’s president, noted, “Fueling our confidence are several new and expanded assets in our existing markets that will come online in 2023. Additionally, we look forward to our entry next year into additional high-growth cannabis markets, including Ohio, Missouri, and Michigan.” (Source: Ibid.)

Analyst Take

MariMed Inc has been firing on all cylinders. The company has a solid balance sheet, its revenues and earnings have been growing, it recently reported its 11th consecutive quarter of positive adjusted EBITDA, and it has been outperforming its competitors in terms of sales growth in all of its key markets.

While MariMed stock (like all pot stocks) has fallen victim to the delay of federal U.S. legalization of marijuana, MariMed Inc is hopeful that initiatives at the federal level will increase cannabis companies’ access to capital in the U.S. and allow pot stocks to be listed on senior exchanges.

This would allow more institutional investors to participate in MRMD stock’s success.