Khiron (TSXV: KHRN) target price raised by Canaccord Genuity
Khiron Life Science’s (TSXV: KHRN) target price has been raised from $5.00 per share to $6.50 per share by Kimberly Hedlin, CPA, CMA who covers Khiron Life Sciences (CSE: KHRN) for Canaccord Genuity. Hedlin makes the following points:
The closing of its recent bought deal for total gross proceeds of $28.8 million means KHRN has sufficient funds to establish a meaningful footprint in the Mexican medical market subject to final regulations. In fact, pro forma cash of approximately $45 million means KHRN’s growth initiatives are now fully funded.
The improvement in trading liquidity and market cap means KHRN can attract a broader investor base. [Hedlin is referring to institutional investors and larger exchange traded funds.]
The market is now beginning to recognize the strategic and regulatory importance of product distribution and market development. KHRN is a leader in this because of ILANS’ 120,000 patients and 3,000 physicians and the Kuida sales platform and regulatory expertise.
Catalysts that will keep the share price momentum going include: medical CBD sales commencing in Q2, final approvals for the Kuida product to be distributed in Mexico where it already has an online distribution agreement, the passing of Mexico’s medical and recreational laws, the construction build out of a facility in Uruguay that will also provide entry into Brazil, and acquisitions where ILANS can establish new clinics. [in other words, there will be a consistent flow of news that confirms KHRN as the leader in this part of the world]
Hedlin estimates the initial value of Mexico’s legalization and KHRN’s ability to gain a 2% patient penetration with a long term target of 6.5% is worth $1.52 per share. On a Sum of the Parts valuation, adding this to the previous target of $5.00 raises the price target to $6.50 per share.
If you’re still not convinced, take a look at the plants KHRN is growing. (click here) By the way, the misting you see on the video I learned is part of an automated cooling system when the ambient temperature rises. This is the initial harvest but starting this summer, a full crop will be planted. I estimate each grow facility can generate over $25 million in revenue. Each new grow facility at this location will cost approximately $500,000 to build and take roughly three months to build. As future grow facilities will be totally dedicated to producing biomass, the yield will be about 20% more or about $30 million or more in revenue per year. The next seven greenhouses (eight in total) can be built in around two years at a cost of around $3.5 million with the potential to generate over $200 million in annual revenue.
Conclusion: Hedlin sees any profit taking as creating an opportunity to accumulate KHRN shares. I agree. Recently KHRN traded at an all-time high of $4.35 per share and the price has corrected to the $3.30 level or a decline of around 25%. When you consider the potential news flow related to significant developments, buying opportunities like this will not come along that often and they probably won’t last long either. You don’t want to miss this opportunity.