CWBHF) trades below $7, the stock is finally at levels where investors can buy the stock. The U.S. CBD market enters 2020 in a highly competitive state and faces FDA uncertainty, but the leading CBD company should attract investor interest as the market value dips to $665 million.” data-reactid=”12″ type=”text”>As Charlotte’s Web Holdings (CWBHF) trades below $7, the stock is finally at levels where investors can buy the stock. The U.S. CBD market enters 2020 in a highly competitive state and faces FDA uncertainty, but the leading CBD company should attract investor interest as the market value dips to $665 million.
As the cannabis sector in general matures, quality brands will eventually rise to the top. The cannabinol or CBD sector already has topped 4,500 brands leaving the general consumer with limited ability to ascertain the brands with the top quality for the price.
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How Charlotte’s Web takes advantage of a quality designation and a leading market share position remains the question. The company used this position to attract leading retailers such as Kroger (KR), but the potential FDA restrictions on dietary supplements and food products has the major FDM retailers holding back on selling the products.
The House Bill H.R.5587 is looking to instruct the FDA to remove any restrictions from allowing hemp-infused CBD in food products. Such a bi-partisan bill would unleash CWB back towards previous estimates for 2020 revenues topping $350 million.
The stock recently rallied to $10 based on the promises of the bill. Unfortunately, or fortunately for investors on the sidelines, CWB is below $7 for a market cap of $665 million. Even better for new investors, the company recently raised ~$50 million to fund operations while the FDA has a mixed message.
Analysts have updated 2020 revenue targets to only $150 million due to up to 85% of potential retail sales coming from products where the FDA has caused mass retailers to pull back on stocking the items due to a lack of legal and regularity concern. CWB had gross margins topping the 75% range and was highly EBITDA profitable before the business was hit by the FDA safety concerns.
The upside remains for the existing business with access to around 10,000 retail stores when the FDA removes regulatory restrictions. Analysts had previous revenue targets in excess of $350 million for 2020 with gross margins topping 75% and EBITDA margins in excess of 20%. The stock only trades at 2x normalized sales targets and somewhere below 10x normalized EBITDA targets.
See CWB’s price targets and analyst ratings on TipRanks)” data-reactid=”31″ type=”text”>Great minds think alike. Over the last three months, three analysts have unanimously declared CWB a “buy.” Their average price target is 13.05 per share, suggesting that shares could more than double in the twelve months ahead. (See CWB’s price targets and a
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