PharmCielo PCLOF Stock Forecast & Analysis

PharmaCielo PCLOF stock is one of the cannabis stocks I have wanted to look at.  PharmaCielo is located in Colombia, and like others in the region, I see a lot of potential upside.  Columbia has passed legislation making insurance companies pay for medical marijuana in Colombia.  That would be solid and increasing revenue for Columbian cannabis companies.  This kind of revenue will likely pay the bills, keeping the lights on, and perhaps a tiny profit would be available.  But, the real motherlode will be exportation to Europe and Israel.  Because of this, I wanted to put together the PharmaCielo PCLOF stock forecast & Analysis.

German legalization and importation is in the process of occurring.  Once this opens up, companies like PharmaCielo, Khiron, Flora Growth, and Clever Leaves, will see big moves in revenue.  PharmaCielo already has a deal lined up for exporting medical marijuana to Germany in the largest distributor in the country.

One thing to note is that PharmaCielo certainly has the capacity as the screenshot below shows.

PharmaCielo could be Dominant World Player

The above graph is a screenshot from the PharmaCielo MD&A.^[1]PharmaCielo MD&A. This shows the capabilities of size.  There are a lot of possibilities here.  First, Columbia has enacted legislation saying that insurance companies must pay for cannabis prescriptions.  And, the laws have also pushed for liberalization of who can get prescribed cannabis.

I can see a continued increases in revenue from Colombia alone.

But, its Germany & Israel that I look for to really push capacity and the potential revenue.  The thing is, however, simply because PharmaCielo has capacity and deal in place, that does not necessarily mean that the product will sell well.  This is something that is still an unknown.  Product quality is a key feature for any company’s future.

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PharmaCielo Financial Data

Here is the latest analysis given the most recent financial data for PharmaCielo.  However, it has been difficult locating future revenue projections for PharmaCielo.  This has made putting the PCLOF forecast & analysis together a small task.  But, once I get more information I will update this analysis.

PharmaCielo Gross Profits

Revenues are increasing.  This is being driven by the recent laws within Colombia with regard to medical cannabis and insurance companies paying the bills.  I believe that this alone would likely scale up revenues for PharmaCielo to a point where they can get to break even.  Then, as Germany and Israel kick in, that is when the real revenue increases occur.  And, that is where the real increases in profitability will happen.

For now, gross margins are within striking distance of competitive levels.  More economies of scale will be needed and that will come with the continual increases in revenue just in Colombia alone.

PharmaCielo Operating Profits

The very best cannabis companies are printing roughly 30% – 35% for operating profits.  I believe that PharmaCielo will be able to get to that level quickly and it is likely to occur this year.  This is the continued pathway toward EBITDA profitability; if not break even.  Then, with even more expansion and growth in revenue, PharmaCielo will have the ability to get to the levels of the big boys at about 15% – 20% after German exportation drives revenues upward.

I am looking for increasing EBITDA profits along the way and I have factored that into my PCLOF stock forecast.

PharmaCielo EBITDA & Net Profits

I believe that scaling up will be a process that is going to happen quickly once the distribution deals with Germany are in place and being fulfilled to their full capacity.  In the meantime, scaling up on a more modest basis will entail hitting break-even levels with profitability levels, and EBITDA will be a key metric that PharmaCielo can achieve this year.

The Colombian deals alone should produce enough revenue and profitability to get to this key metric.  Then, over time, and with all of the capacity that PharmaCielo has, there is a lot of future potential should revenue continue to increase more and more.

PharmaCielo Cash On Hand

On a percentage basis, cash on hand is sitting approximately 1/10th of debt.  From a financing perspective, I do not see too much in the way of problems financing the future.  During this time, with ramping up and scaling up revenue, getting close to profitability will mean financing needs will not be an issue.

PharmaCielo Total Equity

Equity is increasing; something I am always watching for.  It is my understanding that the facility is entirely in place and from here the contracts signed will be acted upon.  Therefore, the total equity will largely all be in place at this point and, it may be that there is not much more to growth here.  All of the contracts will now be fulfilled once legalization pushes forward with Germany.  There could be further expansion of production capacity in the future but, largely, PharmaCielo may be in a position to continue from where they are and build upon what they already have.

PharmaCielo PCLOF Stock Forecast

PharmaCielo PCLOF DCF

The biggest challenge for putting together the PCLOF stock forecast with a DCF is simply: How much will they increase revenue?  This means having to have an understanding of what will be happening within the German market and when they actually legalize.  In the meantime, I kept things rather benign with revenue increases.  I have no idea what PharmaCielo can do in the next few years.  But, as the pieces fall into place, should PharmaCielo be a company that can fulfill its potential, you are looking at possibly a $1B company.  Since PharmaCielo has valuation of about 5% of that right now, this is significant.

I will continually update this.

Is PharmaCielo PCLOF Stock A Good Investment?

For PharmaCielo, will Germany enact legislation and then PharmaCielo be able to start distribution of cannabis worldwide?  If so, and PharmaCielo can build up its customer base, this could be a potential boon for PCLOF stock.

Also, Colombia has enacted legislation that will enable patients to buy medical cannabis and insurance companies having to cover the costs.  This means that there is a strong case for continued increases in revenue.  Given the two, PharmaCielo is set to increase revenue significantly.

At the same time, cannabis federal legalization is set to begin its process in the US.  This will be supportive overall of the stocks.  However, PharmaCielo has no direct exposure to US federal legalization. Still, this will be a potential game-changer for cannabis stock movement.

I fully believe in the industry.  And, I also believe that PharmaCielo is in an interesting position.  Another thing I like is that US MSOs are likely to start considering globalization of cannabis.  PharmaCielo could become a major contender for M&A activity as bigger players work to getting involved in the international markets.

I look for continued moves upward with PCLOF.  While this stock is not a Top Pick, there is potential and this is something I may consider.

PharmaCielo Financial Data

PharmaCielo PCLOF Stock Financial Data