First Berlin Equity Research has published a research update on urban-gro, Inc. (ISIN: US91704K2024). Analyst Ellis Acklin reiterated his BUY rating and maintained his USD 4.30 price target.

After months of rumours and market speculation, news broke Tuesday that the DEA (Drug Enforcement Administration) is finally set to sign off on cannabis rescheduling. This historic shift in Federal policy was confirmed by multiple sources close to the situation and sent cannabis stocks soaring. The move to a Schedule 3 drug will result in massive tax savings for cannabis operators, which should in turn stimulate investment across the sector. The news overshadowed UG’s Q1 reporting, which showed good sequential improvement, and importantly, hit guidance for the period. Management confirmed their full year targets calling for $84m in sales and a break even AEBITDA. The confirmed guide does not reflect rescheduling. urban-gro will undoubtedly benefit from the loosened restrictions, but it may take months to wrap up the legal process before the upside crystallises. That said, we should see a more stable shift in sector sentiment straight away. We are Buy-rated on UGRO with an unchanged $4.3 TP.