Shares of CV Sciences Inc (OTCMKTS: CVSI) are racing higher after a long period of consolidation in a trading range. The trigger behind an uptick upward momentum is the announcement of record revenue and retail distribution expansion that signal robust growth.
CV Sciences Inc Price Analysis
The announcement that the company is expanding its distribution network into food, drug and mass channels is another development that continues to excite investors. The stock’s market sentiments also appear to have inched higher having emerged that CV Sciences boasts of one of the biggest exposure to CBD growth.
Surging market and investor sentiments have resulted in a spike in trading volume with the stock now threatening to break out of the long-term $3.50 to $6.30 trading range. Given the underlying long-term bull trend, CV Sciences remains well positioned to climb the ladder.
A rally followed by a close above the $6.30 mark should open the door for the stock to make a run for 52-week highs of $ 9.20. Above the $3.50 critical support level, CV Sciences remains well positioned to continue edging higher.
Conversely, a violation of the $3.50 support level could result in the acceleration of the sell-off wave, leaving the stock vulnerable to plunging to the $2 mark, the next support level. However, given the bullish momentum in the overall sector, the stock is likely to continue edging higher.
What Does CV Sciences Do?
CV Sciences is a life sciences company operating in a multitude of segments key among them being consumer products and specialty pharmaceuticals. Under the consumer segment, the company is engaged in the development and selling of hemp-based cannabidiol oil. Under the specialty pharmaceuticals, the company develops cannabinoids for addressing various medical conditions.
Why is CV Sciences Surging?
CV Sciences upward momentum has started picking up some pace on the confirmation that the company’s sales grew 133% to $48.2 million in 2018. Revenue in Q4 nearly doubled to $14.2 million from $7.2 million reported a year earlier.
The company attributes the increase in growing brand awareness as well as increased demand for its PlusCBD Gold product line. Operating income was up to $10.2 million equal to 21.2% of total revenue. In contrast, the company generated an operating loss of -$4.9 million in 2017.
Some of the key milestone achieved in the year included the expansion of the company’s retail network to 2,238 stores expected to strengthen CV Sciences sales channels. The company also generated $12.6 million in cash from operations, allowing its cash balance to increase to $12.7 million.
According to Chief Executive Officer Joseph Dowling, they remain well positioned to capitalize on the growing consumer awareness to accelerate sale growth. The passing of the 2018 Farm Bill is another development poised to support sales growth in 2019.
“We are positioning our company to capitalize on this incremental growth opportunity with enhancements to our leadership team and business systems, and are in the planning process for expanded production and fulfillment capabilities to support rising demand,” explained Mr. Dowling.
In the recent past, CV Sciences has expanded its distribution network to make its bestselling, topical PlusCBD Oil Extra Strength Balm product, available in Food, Drug and Mass Channel as part of an effort of accelerating sales.
In addition to sales growth, CB Sciences achieved significant progress on its drug development program plans are already underway to file an investigational new drug application for the company’s lead product CVSI-007 designed to help people stop using tobacco products.
According to the CEO, they are at an important stage on the development of hemp-based CBD market. Companies with the best quality products for consumers are the only ones that are poised to generate significant value as the market expands.
CV Sciences Inc investors have had to contend with wild swings in recent months. However, the stock now appears to be coming through unscathed having the core business growing at an impressive rate. Revenue growth, as well as retail network expansion, underscores a company firing on all cylinders when it comes to operational efficiency.
A combination of strong price performance and favorable technicals suggests that the stock is set for a breakout. Given the strong underlying fundamentals, CV Sciences is primed for further gains on breaking out of the current trading range.
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Disclosure: We have no position in CVSI and have not been compensated for this article.