International Expansion And Margin Improvements Will Support Modest Future Stability

Catalysts

About Organigram Global

Organigram Global is a cannabis producer focused on branded products and wholesale flower for regulated markets in Canada and internationally.

What are the underlying business or industry changes driving this perspective?

• Although international medical cannabis programs in Germany, the U.K. and Australia are expanding rapidly, rising competitive capacity and the time needed to secure EU GMP certification may limit Organigram's ability to maintain triple digit export growth. This could moderate revenue expansion and slow adjusted EBITDA momentum.
• Despite strong innovation in beverages, vapes and infused pre-rolls, the Canadian market is maturing with single digit growth. As a result, mix shift toward higher margin formats may not fully offset category level price pressure, which could cap long term gross margin potential and net earnings growth.
• While cultivation upgrades and LED conversions have lowered cost per gram and raised yields, further efficiency gains are more likely to be incremental than step change. Adjusted gross margin approaching 40 percent could therefore plateau as biomass costs and labor inflation rise, which may constrain net margin improvement.
• Although Organigram holds the number one share in Canada and is launching new products in provinces such as Quebec, retailer shelf space is finite and new branded entrants continue to fragment share. This could slow domestic revenue growth and require sustained marketing spend that weighs on operating margins.
• Despite having $59 million in the Jupiter fund to pursue global opportunities, disciplined deployment and lengthy regulatory timelines in new cannabis jurisdictions may delay meaningful contributions from acquisitions or partnerships. This may limit upside to consolidated revenue and earnings over the medium term.

Assumptions

This narrative explores a more pessimistic perspective on Organigram Global compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts. How have these above catalysts been quantified?

• The bearish analysts are assuming Organigram Global's revenue will grow by 11.5% annually over the next 3 years.
• The bearish analysts assume that profit margins will increase from -9.6% today to 5.0% in 3 years time.
• The bearish analysts expect earnings to reach CA$17.9 million (and earnings per share of CA$0.16) by about December 2028, up from CA$-24.8 million today. However, there is some disagreement amongst the analysts with the more bullish ones expecting earnings as high as CA$52.7 million.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 31.5x on those 2028 earnings, up from -15.3x today. This future PE is greater than the current PE for the CA Pharmaceuticals industry at 16.0x.
• The bearish analysts expect the number of shares outstanding to grow by 6.96% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.12%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• The company is guiding to continued strong net revenue growth that is expected to exceed 300 million dollars in fiscal 2026, supported by record 62 percent revenue growth in 2025 and rapid international expansion. This could drive earnings materially higher than today and increase the share price if these growth targets are met.
• Management expects adjusted gross margin to continue improving towards roughly 40 percent, underpinned by cultivation efficiencies, lower cost per gram and Motif synergies on top of the current 38 percent quarterly margin. This could significantly expand net margins and make the business structurally more profitable over the long term.
• International sales are growing at a triple digit rate with 171 percent growth in 2025 and a dedicated global unit targeting Germany, the U.K., Australia and new product categories such as vapes and gummies. Sustained international scale and a higher mix of premium exports could accelerate revenue and adjusted EBITDA growth beyond what a flat share price implies.
• Canada continues to show Organigram as a clear market leader with the number one national share and several top ten brands. The company is pushing higher margin formats, rationalizing SKUs and taking price in key categories, trends that could support resilient domestic revenue and structurally higher gross margin and earnings over time.
• Improving free cash flow trajectory, disciplined capital expenditure projected at less than 10 million dollars and 84.4 million dollars in cash and short term investments, along with a 59 million dollar Jupiter fund earmarked for strategic opportunities, create scope for value accretive investments, a de risked balance sheet and potentially higher valuation multiples tied to earnings and cash flow growth.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bearish price target for Organigram Global is CA$2.85, which represents up to two standard deviations below the consensus price target of CA$3.4. This valuation is based on what can be assumed as the expectations of Organigram Global's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$4.0, and the most bearish reporting a price target of just CA$2.85.
  
• In order for you to agree with the more bearish analyst cohort, you'd need to believe that by 2028, revenues will be CA$359.6 million, earnings will come to CA$17.9 million, and it would be trading on a PE ratio of 31.5x, assuming you use a discount rate of 6.1%.
  
• Given the current share price of CA$2.81, the analyst price target of CA$2.85 is 1.4% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.