Shares of The Valens (VLNS) fell 8% in early trading on Thursday after the company posted a rise in sales in the second quarter of 2021, but a wider loss than in the second quarter of 2020. The Valens is a British Columbia-based developer and producer of cannabinoid products.
Net revenues came in at C$18.8 million in the quarter ended May 31, an increase of 6.5% from the prior-year quarter. However, it declined 6.2% from the previous quarter.
The company reported gross profits of C$4.1 million in Q2 2021, down from C$4.8 million in Q2 2020.
Meanwhile, net loss amounted to C$8.7 million for the second quarter, compared to a loss of C$3.5 million a year ago.
Tyler Robson, Chief Executive Officer, Co-Founder and Chair of The Valens Company, said: “We believe that our business model remained resilient despite ongoing challenges presented by the pandemic, and our strategy continued to demonstrate its effectiveness as we gained significant market penetration across the country. We are proud to share that in the second quarter alone, Valens had 132 SKUs listed in Canada – a 76% increase in comparison to 75 SKUs listed in the first quarter of 2021. This material growth in SKU listings stands in stark contrast to many of our competitors in the sector and is a testament to the innovation and quality we are bringing consumers and retailers.”
Robson added that an additional 40 SKUs have been accepted by provincial offices with shipments in the third and fourth quarters.
During the quarter, Valens entered the U.S. market by acquiring Green Roads. (See The Valens stock charts on TipRanks)
On June 24, Desjardins analyst John Chu reiterated a Buy rating on VLNS and lifted his price target to C$4.25 (from C$3.75). This implies 68% upside potential.
The rest of the Street is bullish on VLNS with a Strong Buy consensus rating based on 4 Buys. The average The Valens price target of C$4.75 implies upside potential of 88% to current levels. Shares have almost doubled over the past year.
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