First Berlin Equity Research has published a research update on urban-gro, Inc. (ISIN: US91704K2024). Analyst Ellis Acklin reiterated his BUY rating and decreased the price target from USD 6.40 to USD 4.70.
Q3 reporting was highlighted by a $0.7m sequential improvement in AEBITDA to $-1.3m (Q3/22: $-2.3m), and UGRO is guiding towards ‚break-even to slightly positive‘ AEBITDA for the October-to-December quarter. The company has strained this year to lower overhead costs and is now in position to hit the Q4 earnings guide with an expected uptick in turnover to close to $30m. urban-gro also secured a credit line of up to $8m to cover working capital needs going forward, which should give investors a higher level of comfort about the capital structure. We have overhauled our 2024 forecasts to factor in a more conservative timeline for a recovery of the cannabis sector and now expect the business mix witnessed in Q3 to persist into next year. We remain Buy-rated on UGRO with a $4.7 TP (old: $6.4) on the lowered forecasts.