September 30th, 2021 | 12:20 CEST
BioNTech, Sativa Wellness Group, Aurora Cannabis - For the good of humanity
Table of contents:
Aurora Cannabis - Weaker than expected
After the mega-hype of the cannabis industry in 2019, calm has returned, at least when it comes to the prices of listed companies. But the market still has enormous growth potential and is expected to grow by more than 27% per year between 2021 and 2030, according to market research firm Quince Markets Insights. The current market volume is already around USD 20 billion. Cannabis' health benefits and growing medical applications, in particular, are expected to further accelerate growth.
One of the stars in the cannabis sky has been the share of Aurora Cannabis. It was trading at a high of over CAD 180. Currently, the Company ekes out a shadowy existence at CAD 8.42, with its market capitalization melting down to EUR 1.15 billion. The figures for the fourth quarter, which ended on June 30 for the Canadians, were accordingly sobering. With revenues of CAD 54.8 million, compared to CAD 72.1 million in the same period last year, the Company fell short of analysts' forecasts, which were based on revenues of CAD 56.8 million. Earnings per share came in at CAD -0.68, down from CAD -16.66 in the fourth quarter of 2020, with analyst firms also expecting a more minor loss of CAD -0.268.
Despite the weaker-than-expected figures, the stock went up more than 5% after the announcement. However, the initial gains could not be maintained. At the current CAD 8.42, there is a threat of another setback towards CAD 8.0. Therefore the value is only suitable for the watch list.
Sativa Wellness Group- Extreme turnaround
Well diversified, more precisely on three independent pillars, stands the Canadian Company Sativa Wellness Group, which also has branches in Great Britain. The Company's stock market value, which is also traded in Frankfurt, is currently at a manageable EUR 17.28 million, significantly lower than the unicorn Aurora Cannabis. Still, the goals of the new management around CEO Mac Howells are no less ambitious.
In a nutshell, the Sativa Group wants to become one of the leading producers and distributors of high-quality CBD products and CBD services in Europe. CBD stands for cannabidiol, one of the 100 different cannabinoids found in the hemp plant. It has a non-intoxicating effect, unlike THC, and is 100% legal. While people have been using the hemp plant as a medicine for thousands of years, nowadays, the therapeutic properties of CBD are largely confirmed by scientists and doctors and tested all over the world. According to the CBD Industry Growth Report, the global CBD market had an estimated value of USD 4.6 billion in 2018, and this figure has already doubled by 2020.
Sativa Wellness Group's three separate segments include testing services for clinics, as well as direct-to-consumer and direct-to-business services, in addition to manufacturing a range of CBD products on a gold-standard basis for consumers under the Goodbody Botanicals brand. This business is managed under Goodbody Wellness. With PhytoVista, Sativa also owns one of the top 3 CBD and hemp testing laboratories in Europe.
Following the realignment of the management team and the strict demarcation of the divisions, the Canadians were already able to post record sales in the first quarter. In addition, the Goodbody Botanicals trading division has been consistently in the black since the beginning of the year after years of losses. The figures for the second quarter now clearly show the success of the restructuring measures and point to the enormous potential for the future. Revenue increased by 828% to CAD 6 million compared to the same quarter last year. Gross profit increased 804% to CAD 3.3 million in the second quarter of 2021 compared to the same quarter in 2020, with a gross margin of 55%. Thus, the first net profit in history was brought in with a plus of CAD 79,000; in the previous year, the result still amounted to a net loss of CAD 2.4 million.
In addition to the numbers, other operational milestones were achieved. PhytoVista Laboratories received ISO/IEC (International Electrotechnical Commission) accreditation. Goodbody Botanicals was listed on the UK government website to offer two- and eight-day quarantine testing for travelers returning to the UK, representing a significant opportunity for Sativa's COVID testing clinics. The trend is absolutely in the right direction for Sativa Wellness Group. Speculative investors should watch the stock more closely.
BioNTech - Strongly punished
From a fundamental perspective, nothing negative has happened in recent days at the Mainz-based vaccine manufacturer BioNTech. Together with its US partner Pfizer, the Company plans to apply to the US Food and Drug Administration (FDA) for emergency approval of its COVID-19 vaccine for children aged 5 to 11 in the coming weeks. In addition, approval for annual booster vaccines remains on the table, which should provide BioNTech with recurring revenue.
However, looking at the chart-technical picture, not only of the Mainz-based Company but also that of Pfizer or Moderna, extreme caution is called for. With the break of the striking support zone at EUR 325, a strong sell signal was generated, whereby the share already meets the next important mark at EUR 275 after the strong sell-off.
Should this also be torn with high volume, a further setback threatens, initially in the area around EUR 250. In terms of valuation, a correction is more than healthy. A stock market value of USD 68.36 billion seems very ambitious. Investors should first wait for things to calm down.
Research is breaking new ground and looking for alternative treatments. Although the cannabis market is predicted to experience extreme growth, stocks like Aurora Cannabis continue to consolidate at low levels. Sativa Wellness Group is interesting in the long term due to a successful turnaround. BioNTech is caught in the middle of a correction and is only suitable for the Watch List.
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