Cowl Progress Stays To Be Wildly Undervalued, This Analyst Says

Roth Capital Markets analyst Bill Kirk maintained his “Buy” rating and C$8.00 value purpose on Cowl Progress (Cowl Progress Stock Quote, Chart, Info, Analysts, Financials TSX:WEED) in a Dec. 16 report, following the company’s launched acquisition of Montreal-based MTL Cannabis.

Cowl talked about it’s going to buy MTL for complete consideration of roughly C$125-million, implying an enterprise value of C$179-million, in a transaction that Kirk talked about meaningfully strengthens Cowl’s place in every the Canadian medical and adult-use markets. Submit-transaction, the blended agency is anticipated to increase its share of the medical cannabis market whereas approaching a top-five place in adult-use.

MTL operates with a give consideration to high-THC merchandise and quality-driven cultivation infrastructure, producing gross margins above 50%, optimistic free cash motion and incremental EBITDA, though Kirk well-known growth has simply these days slowed. He talked about MTL stands to study from Cowl’s nationwide distribution platform, whereas Cowl good factors entry to improved product prime quality for core producers resembling Tweed.

“Whereas Claybourne has a presence inside the premium vape and pre-roll segments, MTL brings its principal upper-mainstream flower, pre-roll and edible/focus offering to spherical out Cowl’s menu,” Kirk talked about. Brightfield data reveals MTL holds the best upper-mainstream flower market share in Canada and ranks fourth in pre-rolls, with a really strong presence in Quebec.

Cowl plans to retain key members of MTL’s administration crew to help the enlargement of hash and pre-roll merchandise into British Columbia, Alberta and Ontario, protect and improve operations at MTL’s two Quebec cultivation and manufacturing facilities, and leverage the broader platform to help rising worldwide demand.

MTL generated trailing-12-month internet product sales of C$83-million by way of September, on product gross sales of C$105.2-million, with gross margins of roughly 51%. In fiscal 2025, MTL delivered C$20.3-million in Adjusted EBITDA, though year-to-date outcomes stage to margin pressure, with first-half fiscal 2026 Adjusted EBITDA of C$5.3-million, down from C$10.1-million a 12 months earlier. Net earnings was down 1% year-over-year within the similar interval.

Cowl expects to grasp roughly C$10-million in annualized synergies inside 18 months of closing. Based totally on trailing outcomes, the transaction implies an EV-to-EBITDA a lot of of roughly 12 events, falling to about seven events post-synergies. On a run-rate basis, the a lot of rises to roughly 18 events pre-synergies and 9 events post-synergies.

Beneath the phrases of the deal, MTL shareholders will get hold of 0.32 of a Cowl share plus C$0.144 in cash per MTL share, equating to roughly 43.8 million Cowl shares and C$20-million in cash consideration. The transaction represents an estimated 45% premium to MTL’s prior shopping for and promoting value and is anticipated to close in February 2026. The roughly 85% equity and 15% cash building preserves Cowl’s liquidity nonetheless results in roughly 18% dilution to present shareholders.

Kirk talked about the transaction should switch Cowl nearer to EBITDA breakeven as quickly as built-in and views the valuation as a associated upside comparable for pals resembling Aurora Cannabis.

Cowl Progress, headquartered in Smiths Falls, Ont., produces and sells medical cannabis and cannabinoid-based shopper merchandise in Canada and internationally, with producers along with Tweed, Storz & Bickel, This Works and BioSteel.

Kirk forecasts Cowl will generate C$285.5-million in earnings and harmful C$10.9-million in Adjusted EBITDA in fiscal 2026, sooner than returning to profitability in fiscal 2027 with C$298.2-million in earnings and C$37.8-million in Adjusted EBITDA.

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