Continued Strong Momentum
ODI Pharma AB (”ODI Pharma” or the ”Company”) delivered another strong quarter during Q4-23/24 (broken fiscal year), further proving the collaboration with Synoptis as a game changer in terms of commercializing the Company’s products. For the upcoming fiscal year 2024/2025, where the collaboration agreement will be active for the full year, we estimate sales of SEK 69.1m, while reaching an EBIT margin of 9%, which makes ODI Pharma one of few companies in the cannabis sector delivering profitability. With estimated net sales of SEK 127m by 2025/2026, and with an applied P/S multiple of 2.6x, a potential present value per share of SEK 17.4 (17.4) is derived in a Base scenario.
- Continued Growth
ODI Pharma delivered another strong quarter regarding sales, amounting to SEK 7.5m, 9% above our estimates of SEK 6.9m. The reported sales is expected to be primarily attributable to sales in the Polish market via the collaboration agreement with Synoptis Pharma, further validating the anticipated strong sales growth because of the agreement. We expect Synoptis strong market position in Poland, and other Eastern European countries, to continue to fuel growth over the upcoming fiscal year as the contract will be active for the full year.
- Stable Cost Base
Adjusted for a one-off cost of SEK 0.35m related to the sale of the Kandol brand which occurred in December 2023, the operating expenses amounted to SEK 2.3m, corresponding to an increase of 25%. The increased cost base is assumed to be attributable to shipping costs for the products sold, however Analyst Group reiterates the view of ODI Pharma’s scalable business model, where operating costs can be kept low even with a rapid increase in sales. For the upcoming fiscal year 2024/2025, we estimate an EBIT margin of 9%.
- Enters the Swiss Market
ODI Pharma has announced that the Company has completed a first small delivery of products to the Swiss market, which is a newly addressed geographical market. Analyst Group sees this as a strategic market entry since it is the first delivery of products outside the collaboration agreement with Synoptis, validating that ODI Pharma can expand to new markets outside of Eastern Europe for increased revenue diversification. Going forward, we see opportunities for ODI Pharma to enter additional new markets in Western Europe.
- Small Changes in our Valuation Range
As the report was largely in line with our expectations, we have only made minor adjustments in our financial forecasts. Taking these adjustments into account and considering a general multiple contraction among peers, we have made slight adjustments to our Bear and Bull scenarios while maintaining the derived valuation in the Base scenario.
Value drives
Historical profitability
Risk profile
Management & Board of Directors
All analyses of companies from 2020 onwards are rated based on a new rating system - Value Driver, Historical Profitability and Management & Board ranges from 1 to 10, where 10 is the highest rating. The risk profile ranges from 1 to 10, where 10 is to be considered the highest risk. Stock analyses of companies published before 2020 have been rated based on a different model.
