New Age Beverages Corporation NBEV shares were trading slightly higher Monday after an analyst report from Northland Capital Markets focused on the company's latest acquisition and the passage of the federal Farm Bill.
The Analyst
Analyst Mike Grondahl reiterated an Outperform on New Age Beverages and raised the price target from $6 to $8.
The Thesis
Northland's higher price target is based on a number of recent developments surrounding New Age Beverages, Grondahl said in a Monday note.
The beverage maker completed the $85-million acquisition of Morinda Holdings Dec. 21.
"The important point of the acquisition is how well NBEV can utilize the 160,000 direct-to-consumer distribution points to sell other brands in the portfolio and especially NBEV's CBD products," the analyst said.
In addition, the passage of the 2018 Farm Bill — which legalized hemp and hemp-derived cannabidiol — will create new opportunities for New Age Beverages, Grondahl said.
The company said 125,000 locations (representing "numerous retailers") have requested CBD products, and NBEV CBD products could hit the shelves in the near future, according to Northland.
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Investors should still keep in mind the FDA's position on CBD, Grondahl said, although New Age Beverages' products do not claim medicinal benefits.
The CBD beverage maker also suggested that several large retailers have expressed interest in its products, the analyst said. The company might be exploring partnerships with cannabis companies, he said.
Overall, Grondahl projects that with the acquisition of Morinda, New Age Beverages could generate around $325 million in revenue and $30 million in adjusted EBITDA this year.
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