MediPharm Labs Corp (OTCMKTS: MLCPF) shares are pulling lower in what appears to be a minor correction, following a meteoric rise to all-time highs. The stock has been on an excellent run if a 100% rally since the start of the year is anything to go by.
Share Price Analysis
The rally has come on investors reacting to a string of cannabis oil agreements that the company has signed in the recent past. In addition, the company completing its first shipments has also gone a long way in shoring the stock’s sentiments in the market.
The company signing its first international label sale agreement and announcing plans to list in the Frankfurt stock exchange has also continued to fuel the upward momentum. While the stock has started pulling lower, the same appears to be a minor correction on investors taking profits.
Support on further pullbacks is seen at the $2 a share level, above which the stock remains a solid buy. A breach of the critical support level, on the other hand, could see the stock plunging to the $1.50 mark, the next substantial support level.
However, given the strength of the upward momentum MediPharm Labs, remains well positioned to continue powering high after the minor correction.
What Does MediPharm Labs Do?
MediPharm Labs is engaged in the production of Pharma-grade cannabis oil and concentrates. The company also provides cannabis contract processing services to licensed producers as well as growers.
Why is MediPharm Labs Exploding?
The signing of a string of multimillion-cannabis oil supply agreement has gone a long way in strengthening investor confidence in MediPharm Labs. The company has emerged as a clear leader in the cannabis extraction business, given by the sales agreements it has signed so far.
For starters, the company has signed a $35 million cannabis oil, sales agreement, with a licensed producer in February. The deal became the fourth sales agreement, the company has signed in the present. The agreements are poised to generate as much as $85 million for the company over a span of 15-months.
“We have quickly been able to execute several major contracts already and continue to see robust demand for our specialized products and services and are well positioned to achieve strong revenue growth as a dominant extraction company in the cannabis industry,” said Pat McCutcheon, CEO of MediPharm Labs.
The industry has started recognizing MediPharm as a leader in the supply of high quality purified cannabis oil. While taking advantage of the growing credibility, the company plans to accelerate growth through a multitude of new contracts going forward.
In addition to gaining traction in North America, MediPharm has once again become the first extraction only licensed producer to engage in global export. The company has inked an international sales agreement with AusCann.
The agreement paves the way for the company to expand its footprint on the international scene, as it continues to pursue new revenue streams.
Under the terms of the agreement, the company is to supply private label purified, pharmaceutical grade cannabis oil concentrates for export to Australia. AusCann intends to use the concentrates to manufacture hard-shell cannabinoid capsules.
“As the first extraction-only LP to begin exporting to Australia, this agreement marks an important milestone that accelerates our expectations for future growth. Looking ahead, we expect to begin supplying additional international markets to build our robust global distribution platform,” said Mr. McCutcheon.
In addition, the company is planning to broaden its exposure in the equity market with listing in Frankfurt stock exchange. According to the Chief Executive officer, listing in Europe is an important step as part of the company’s future growth. The listing should go a long way enhancing the company’s awareness among the global investment community.
MediPharm remains well positioned to continue edging higher as investors absorb a string of positive developments that affirm the company’s long-term prospects. The signing of supply agreements worth millions of dollars, affirms what could turn out to be a breakout year when it comes to revenue generation.
Global expansion is another development that should go a long way in strengthening the company’s revenue generation capabilities. That said the stock looks set to remain a darling of the markets and thus continue climbing the ladder.
MediPharm is an ideal pullback play with bulls in control, given the underlying long-term uptrend.
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Disclosure: We have no position in MLCPF and have not been compensated for this article.