Equity Research Focusing on the Consumer Sector, Small Cap Consumer Research

Small Cap Consumer Research

Equity Research Focusing on the Consumer Sector

Small Cap Consumer Research, LLC is a leading company-sponsored equity research provider focusing on the consumer sector (apparel, brand licensing and specialty retailing segments).

Equity Bottom-Up

<ul><li>We are reiterating our Buy recommendation, $8 price target and projections as we look at key trends for 2H2024 and beyond for urban-gro.</li><li>Given the increase in Controlled Environment Agriculture ("CEA") contract momentum, the pending reclassification from a Schedule I to a Schedule III drug for marijuana, the potential for Florida to legalize recreational cannabis on Election Day, and what we believe has been continued demand for commercial services, we believe the potential for top and bottom line upside for the company has continued to increase.</li><li>That said, we have, given urban-gro's prior history and the current valuation, remained conservative in our projections.</li></ul>

We are reiterating our Buy recommendation, $8 price target and projections as we look at key trends for 2H2024 and beyond for urban-gro.Given the increase in Controlled Environment Agriculture ("CEA") contract momentum, the pending reclassification from a Schedule I to a Schedule III drug for marijuana, the potential for Florida to legalize recreational cannabis on Election Day, and what we believe has been continued demand for commercial services, we believe the potential for top and bottom line upside for the company has continued to increase.That said, we have, given urban-gro's prior history and the current valuation, remained conservative in our projections.

UGRO; 2H Signposts: Leaving the CEA Wilderness?; Reiterate Buy, $8 PT

<ul><li>We are reiterating our Buy rating, projections and price target for urban-gro after meeting with management at their Centennial, CO headquarters.</li><li>After a period where the company has repositioned the business model around the commercial real estate space, urban-gro is optimistic on the prospects for a return to growth for Controlled Environment Agriculture ("CEA"), driven by the pending reclassification of cannabis by the Drug Enforcement Administration and the potential for Florida to legalize recreational cannabis in November.</li><li>Further, management is breaking down silos between functions to be able to offer more services and register stronger overall returns.</li></ul>

We are reiterating our Buy rating, projections and price target for urban-gro after meeting with management at their Centennial, CO headquarters.After a period where the company has repositioned the business model around the commercial real estate space, urban-gro is optimistic on the prospects for a return to growth for Controlled Environment Agriculture ("CEA"), driven by the pending reclassification of cannabis by the Drug Enforcement Administration and the potential for Florida to legalize recreational cannabis in November.Further, management is breaking down silos between functions to be able to offer more services and register stronger overall returns.

UGRO: Management Focused On Driving Growth, Returns; Reiterate Buy, $8 PT

<ul><li>We are reiterating our Buy rating and $8 price target and conservatively leaving our 2024 and 2025 revenue and Adjusted EBITDA projections unchanged after urban-gro registered upside in 1Q top and Adjusted EBITDA and reiterated prior 2024 guidance.</li><li>That said, with the Drug Enforcement Agency approving the reclassification of cannabis from a Schedule I to Schedule III drug, and the potential for Florida to approve recreational cannabis usage in November, we believe our 2H24 and especially 2025 projections could prove highly conservative.</li><li>As such, we are reiterating our Buy rating and $8 price target.</li></ul>

We are reiterating our Buy rating and $8 price target and conservatively leaving our 2024 and 2025 revenue and Adjusted EBITDA projections unchanged after urban-gro registered upside in 1Q top and Adjusted EBITDA and reiterated prior 2024 guidance.That said, with the Drug Enforcement Agency approving the reclassification of cannabis from a Schedule I to Schedule III drug, and the potential for Florida to approve recreational cannabis usage in November, we believe our 2H24 and especially 2025 projections could prove highly conservative.As such, we are reiterating our Buy rating and $8 price target.

UGRO: 1Q Review: Remain Calm & Conservative; Reiterate Buy, $8 PT

Equity Long-Short Analyst

Pyari Menon

Thematic (Sector/Industry)

<ul>
<li>We compare how a portfolio composed of our top five picks in each of our thematic reports based on datamining technical publications would have performed versus Indices</li>
<li>The size of outperformance for various periods suggests that incorporating innovation quality index that we use to rank companies can be a solid tool to generate alpha.   </li>
<li>We understand that much of the outperformance is generated by positive skew but even backing out the largest two contributors we see solid outperformance.</li>
</ul>


We compare how a portfolio composed of our top five picks in each of our thematic reports based on datamining technical publications would have performed versus Indices
The size of outperformance for various periods suggests that incorporating innovation quality index that we use to rank companies can be a solid tool to generate alpha.   
We understand that much of the outperformance is generated by positive skew but even backing out the largest two contributors we see solid outperformance.


A Look at How a Portfolio Composed of Our Top Five Innovators in Each Report Would Have Performed

<ul>
<li>Legal and regulatory changes have spawned cannabis companies, focused on cannabis-based medical and recreational products and the development of new breeds of crop </li>
<li>In Cannabis innovations <a href="https://www.smartkarma.com/entities/philip-morris-international" target="_blank" data-smartkarma-citation="entities:13328:1" rel="noopener">Philip Morris International (PM US)</a>, <a href="https://www.smartkarma.com/entities/canopy-growth-corp" target="_blank" data-smartkarma-citation="entities:25083:1" rel="noopener">Canopy Growth (WEED CN)</a>, <a href="https://www.smartkarma.com/entities/jazz-pharmaceuticals-plc" target="_blank" data-smartkarma-citation="entities:15881:1" rel="noopener">Jazz Pharmaceuticals (JAZZ US)</a><a href="https://www.smartkarma.com/entities/merck-co-inc" target="_blank" data-smartkarma-citation="entities:1130:1" rel="noopener">Merck &amp; Co Inc. (MRK US)</a> and <a href="https://www.smartkarma.com/entities/takeda-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:11747:1" rel="noopener">Takeda Pharmaceutical (4502 JP)</a> lead</li>
<li>In overall plant-based extracts innovations <a href="https://www.smartkarma.com/entities/jazz-pharmaceuticals-plc" target="_blank" data-smartkarma-citation="entities:15881:1" rel="noopener">Jazz Pharmaceuticals (JAZZ US)</a>, <a href="https://www.smartkarma.com/entities/eid-parry-india-ltd" target="_blank" data-smartkarma-citation="entities:6925:1" rel="noopener">Eid Parry India (EID IN)</a>, <a href="https://www.smartkarma.com/entities/abbott-laboratories" target="_blank" data-smartkarma-citation="entities:11987:1" rel="noopener">Abbott Laboratories (ABT US), </a>Indena, Mars Incorporated, and Liveleaf are the leaders.</li>
</ul>


Legal and regulatory changes have spawned cannabis companies, focused on cannabis-based medical and recreational products and the development of new breeds of crop 
In Cannabis innovations Philip Morris International (PM US), Canopy Growth (WEED CN), Jazz Pharmaceuticals (JAZZ US)Merck &amp; Co Inc. (MRK US) and Takeda Pharmaceutical (4502 JP) lead
In overall plant-based extracts innovations Jazz Pharmaceuticals (JAZZ US), Eid Parry India (EID IN), Abbott Laboratories (ABT US), Indena, Mars Incorporated, and Liveleaf are the leaders.


Insights from Data Mining Technical Publications - Plant Extracts Including from Cannabis

Canada

Canopy Growth Corporation, through its subsidiaries, is a producer of medical marijuana. The Company's group of brands represents distinct voices and market positions designed to appeal to an array of customers, doctors and strategic industry partners.

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Canopy Growth (WEED CN)

UGRO; 2H Signposts: Leaving the CEA Wilderness?; Reiterate Buy, $8 PT

We are reiterating our Buy recommendation, $8 price target and projections as we look at key trends for 2H2024 and beyond for urban-gro. Given the...

Small Cap Consumer Research

UGRO: Management Focused On Driving Growth, Returns; Reiterate Buy, $8 PT

We are reiterating our Buy rating, projections and price target for urban-gro after meeting with management at their Centennial, CO...

Small Cap Consumer Research

UGRO: 1Q Review: Remain Calm & Conservative; Reiterate Buy, $8 PT

We are reiterating our Buy rating and $8 price target and conservatively leaving our 2024 and 2025 revenue and Adjusted EBITDA projections...

Small Cap Consumer Research

A Look at How a Portfolio Composed of Our Top Five Innovators in Each Report Would Have Performed

Our datamining reports ranks companies within thematic based on innovation quality. We see strong outperformance in a portfolio built using the top...

Pyari Menon

Insights from Data Mining Technical Publications - Plant Extracts Including from Cannabis

Herbal medicinal and nutraceutical extracts are seen as instruments to maintain health and treat some conditions. Cannabis, in particular, will see...

Pyari Menon

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