Friday, 12 October 2007

Another Analyst High on Planet Organic

Octagon Capital issued a recent report recommending Planet Organic (POH - TSX V) as a BUY, with a 12-month target price of $3.75. (At the writing of this, Planet shares closed at $2.51)
Analyst Robert Gibson wrote in his report that the combination of acquisitions Planet Organic is planning on and an organic/natural market that is growing by over 20% per year, "will result in superior growth in sales and earnings."

He's calling for $54.5 million in sales, $4.4 million EBITDA and $2.4 million in earnings ($0.08 EPS) for Fiscal 2007 (June 30) and $117 million in sales, $8.2 million EBITDA and $4.4 million in earnings ($0.12 EPS) in F08.
"Timing, of course, is everything; and the time to catch this wave is now," Gibson concluded at the end of a section dealing with Planet Organic's aggressive plans to expand in the United States, where the organics market is much larger than that in Canada and is growing rapidly.
Gibson noted that in 2006, year-over-year organic food product sales in mainstream Canadian grocery stores increased 28% to $412 million. In the United States, the year-over-year increase was 22% for a total of $16.9 billion in sales.

These staggering increases will only heighten consumer awareness about the benefits of organic foods and it will also serve to increase supplies thereby lowering the gap between organic and mainstream foods.
"Under this scenario, we believe that more consumers will seek out specialty organic retailers (such as Planet Organic) in search of greater product offerings and better product knowledge than are currently being provided by mainstream grocers," Gibson concluded.
Octagon's report is the second positive report done on Planet Organic.

PI Financial issued an update report this past September with a BUY recommendation and a 12-month target price of $4.