Clever Leaves 2Q: Neutraceuticals Up, Preparing For Cannabis Flower Exports From Colombia


The Analyst

Pablo Zuanic from Cantor Fitzgerald maintained an Overweight rating on the multinational cannabis company Clever Leaves Holdings Inc. (NASDAQ: CLVR) (NASDAQ: CLVRW) and lowered its 12-month price target to $4.30 from $4.50 “on slightly reduced estimates.”

The Thesis

Clever released its financial results for the second quarter ended June 30, 2022, revealing revenue increased 27% to $4.7 million compared to $3.7 million in Q2 2021.

Although cannabinoid exports fell 35% sequentially, management kept guidance for the year at $7-12M (on top of $13Mn from the U.S. nutraceuticals piece). According to Zuanic, new distribution agreements, a high THC potency launch in Germany (24%), the start of dry flower exports from Colombia by the fourth quarter, and the firm’s EU GMP permits for the Portugal operation “bode well for 2H22 and beyond.” “We see CY23E exports 3x CY22E levels,” he said.

Zuanic noted the stock is attractively valued in the “pure export” groups (at CY23E 1.6x sales), and commended the firm's efforts to reduce cash burn to help mitigate financial risks.

The analyst highlighted the potential legalization of cannabis in Colombia, which would benefit cannabis companies such as Clever, which "adds optionality to the investment case (despite the uncertain timeline).

“We also believe the company has flexibility in Germany on the back of five different distribution partnerships as that market moves forward …

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