Vext Sciences VEXTF Stock Forecast & Analysis

Vext Sciences, VEXTF Stock, is one of my Top Picks for a number of reasons.  First, they are profitable, but undervalued relative to the broader market.  Management at Vext Sciences is keenly focused on cost savings and that adds to the bottom line.  Another big reason that I like Vext Sciences is its positioning in the cannabis industry of finding medical-only, limited licensing states to start that have large populations and adult-use upside potential.  This is a proven pathway to success and the big reason I wanted to put together the VEXTF stock forecast.

Vext Sciences is mostly situated in Arizona.  But, with Letters of Intent (LOI), and strategic partnerships, Vext Sciences is now moving in to Ohio and getting ready for four other jurisdictions.  When you consider the advantages of how this small company is growing organically, and profitably into limited legalization that will convert to full legalization, you see why Vext Sciences has a track record that will produce powerful results.

Arizona beats out Colorado in Cannabis Sales

On a per-capita basis, cannabis consumption maintains a fairly steady percentage across the nation.  Given that, you can base how well a state is going to do with its cannabis consumption sales by first looking at the population.  Here are the three states we are considering right now and their respective populations:

• Colorado: 5.77M
• Arizona: 7.15M
• Ohio: 11.79M

Colorado is a what I would consider a mature market having flipped to adult-use legalization in 2012 (the first state in the nation to do so along with Washington State).  When we analyze cannabis consumption metrics, we turn to Colorado.

Arizona, in sales, has surpassed Colorado.  What is important about that is that Arizona has flipped to adult-use legalization just about a year ago.  So, the fact that the Arizona has beaten out Colorado so quickly is telling of the cannabis economy in Arizona.

There are big differences in licensing in Arizona versus Colorado.  The biggest difference is the limitations on licenses in the state of Arizona versus Colorado.  It is my understanding that Arizona will not be issuing any more dispensary licenses in the state.  That makes Vext Sciences a solid opportunity for a major player that is not already in the state.

Then, there is Ohio

As mentioned, Vext Sciences is expanding into the state of Ohio.  This is a limited license state, which that will play well into the early adopters.  And, Ohio has a high potential of turning into an adult-use legal state which, the early players will do well in an environment such as that.

If Arizona is the playbook, a move into Ohio will mean that Vext Sciences has the potential to get in early and establish itself.  Already, Vext Sciences is getting on dispensary shelves.  This gets them in the “first to market” position.  If, and when Ohio flips to adult-use legal, this will prove pivotal.

But, Arizona also proves that Vext Sciences can show up in Ohio, and elsewhere, and be profitable.  That is ultimately the key.  Vext Sciences is approaching its moves into Ohio the same way it has done in Arizona, with partnerships to get feet in the door and keep costs minimal.  And, they are scaling up in stages, just like Arizona, instead of betting big and then trying to figure out how to pay for it afterward.

Vext Sciences future growth in Arizona

Expect even better growth in revenue and margins with Vext Sciences with its legacy operations in Arizona for two main reasons:

• COVID lockdowns are being lifted (More tourism)
• Vext Sciences is expanding its current grow footprint

The COVID restrictions have had a dampening effect on a lot of activity throughout the state of Arizona.  Expectations are for increased economic activity, especially with the potential of more tourism.

But, the expansion of more grow and processing facilities that are coming online as I write this will mean a higher potential revenue stream along with improved margins.  These two factors will add significantly to the bottom line and we should see the accretive potential very soon.

The methodology that Vext Sciences is using to scale in its production is something that I have appreciated.  Instead of building one ginormous facility that needs to be paid for, Vext Sciences is scaling in.  More facilities are coming on line right now that will already begin to see accretive revenue.

Vext Sciences Financial Data

Here is the Vext Sciences VEXTF stock forecast and analysis from the latest financial data^[1]Vext Sciences Investor Relations.  I will continually update this information as Vext Sciences rolls out its new facilities.

VEXT Sciences Gross Profits

From the perspective of gross profits, there are two real standouts that bear mentioning.  First, revenues were flat.  Yet, cost of goods (COGS) went down on a relative basis.  This pushed gross margins up.  Still, Vext Sciences has the opportunity to increase this even more. With the new facilities coming on line in AZ, this will add increased revenue potential and through economies of scale, the effect of lowering the cost of goods sold.  This will increase gross margins even more.

This becomes culture.  Management is keenly focused on cost controls.  This is why Vext Sciences prints profitably.  They have been able to take lower revenue and squeeze every drop of profit out of every penny of revenue.

As Vext Sciences continues forward with adding more capacity, building revenue, and improving margins, this company will be an important profit source.  And, as they scale into the medical-only market to then switch up to adult-use regions, the footprint Vext Sciences will enjoy means a distinct long term advantage.

VEXTF Sciences Operating Profits

From the operational side of things, Vext Sciences has always been the leader in the industry.  However, recent moves have increased operating costs which drove up operating efficiencies relative to revenue.  But, operating efficiencies are a cost ratio.  Despite the increase in operating costs, once revenues start to show up from the increased investments, operating efficiencies will decline – you want the lowest possible number here.

For perspective, most companies that I follow here are hitting their stride between 30% – 35%.  But, this is the early stages of cannabis legalization.  So, expect that as these businesses continue onward throughout the years, the 30% – 35% range will be minimized downward to where the broader S&P 500 prints – roughly 15% – 20%.

Vext Sciences has proven they know how to get there as they had been printing single-digit operating efficiencies, holding the distinction of being the best of all cannabis stocks.

VEXT Sciences EBITDA & Net Profits

For many quarters, Vext Sciences has provided positive EBITDA & Net Earnings profits.  And, as they expand into new markets, this should continue.  What I would love to see is that after Ohio comes fully on line and the business is built up, can Vext Science replicate its success in more markets at a faster pace?

In the early stages of all of this, those first to market companies will establish them more soundly.  So, getting to new markets faster would be a long-term strategy that will yield high results.

VEXT Sciences Cash On Hand

The odd thing, to me, about Vext Sciences and its cash on hand is the dwindling cash picture.  They are profitable.  Cash on hand should be heading higher.  The projects that are being brought on line are funded.  Yet, cash is heading lower and lower; a matter of CapEx.  I would want to see bigger increases here.

But, VEXT Sciences is simultaneously profitable and expanding, and if the investments add future value, then this is positive.  Also, Vext Sciences will have ample access to capital should they need to take on further debt for future CapEx projects.

At the same time, a balance needs to be struck between cash on hand and cash:debt ratio.  Being net earnings positive, with sizable total equity, I would expect slightly higher cash-to-debt ratios for Vext Sciences.  They are more mid-road at this stage.  But, they are being compared to companies that are not profitable and yet Vext Sciences does not “beat” them in this metric.  This is not a gripe or complaint.  Merely an observation.

VEXT Sciences Total Equity

When it comes to adding shareholder value, total equity is one of the first quantitative metrics I look toward to see what management is doing.  In this regard, Vext Sciences will be adding more and more equity once the new facilities come on line in both Arizona and Ohio.  So, my expectation over the next four quarters throughout 2022 is that we see continual increases here.

My bet is that we see a big jump in equity once these facilities come on line and start adding revenue and profits.  The fact that Vext Sciences management is well-capitalized and not over-extending itself too far is a real positive.  The fact that there is likely to be an increase in assets by double-digit percentages as from these new operations only shows how few investors are paying attention to VEXTF stock.

I will continually update the progress of total equity as these assets come on line and add to production, and by extension, value to investors.

VEXT Sciences VEXTF Stock Forecast

Vext Sciences VEXTF Stock DCF

There will be changes with revenue growth for Vext Sciences as they utilize additional facilities and open its new areas in Ohio.  This will push the rate of growth I could have used in the VEXTF forecast and DCF.  I will continually update this stock with the focus of how the new facilities roll out and add to top line and bottom line for Vext Sciences.

For now, this is a modest projection for the VEXT stock forecast.

Is VEXT Sciences VEXTF Stock A Good Investment?

Unlike a lot of other investors, I see the big potential with an investment in VEXTF stock.  This is a company that is expanding into areas that make sense: Low profile with big future potential down the road.  And, Vext Sciences relies upon a cost-conscience strategy and heavy organic growth which, this will always play well with VEXTF stock.

Vext Sciences is profitable.  No one seems to be noticing considering the potential opportunity.  And, as Vext Sciences expands into other markets, expanding its footprint, they will add move value to investors.

Longterm, I expect VEXTF stock to outperform other cannabis stocks.  Already, being profitable, they are a company that has this ability.  But, without cannabis federal legalization yet to happen in 2022, the masses have yet to even really find the sector let alone a rare gem such as VEXTF Stock.

Early acquirers of VEXTF stock will be well-rewarded.  That I feel certain about.