Tables have turned, and bulls are taking the fight to bears, as CV Sciences Inc (OTCMKTS:CVSI) bounce back continues to gain momentum. The catalyst behind the recent share price spike is the confirmation that the company did indeed generate record sales and gross profit in Q3.
CV Sciences Price Analysis
The company reporting impressive Q3 financial results has all but strengthened the stock’s sentiments among investors. High turnover in traded shares attests to growing investor’s confidence about the stock’s long-term prospects.
CV Science reporting record gross profit profits also affirms its prospects when it comes to generating shareholder value. The company has also strengthened its retail distribution network further strengthening its streams of revenue, set to support and accelerate sales growth going forward.
After a steep pull back from record highs of $9.20, to the $3.50 handle, the stock has once again started to bounce back. With bulls slowly regaining control, it is only a matter of time before the stock takes out the $6.30 mark, the immediate resistance level.
A breach of the $6.30, on the upside, should open the door for bulls to push the stock to $52 weeks high of $9.20. On the downside, the stock faces immediate support at the $3.50 level. A sell-off followed by a close below the critical support level could leave the stock vulnerable to further declines on short sellers regaining control.
In our view, CV Science remains well positioned to continue climbing high, backed by a string of positive developments that continue to strengthen investor confidence in the stock.
What Does CV Sciences Do?
CV Sciences is a cannabis-focused company that operates under two distinct business segments. The company operates a drug development division focused on the development and commercialization of novel therapeutics leveraging CBD. Its other division manufactures markets and sells plant-based CBD products to a range of markets.
Why is CV Sciences Surging?
CV Sciences is trading high in the market on the announcement of record-breaking financial results for Q3. The company reported record sales of $13.6 million attesting to the company’s continued organic expansion into new sales channels. Q3 sales represented a 143% year over year increase and a 10% sequential quarterly increase.
The company also reported record gross profit of $9.9 million representing a 149% year over year increase. The increase also affirmed the company’s ability to expand sales while maintaining strong gross margins.
CV Sciences exited the quarter with $10.3 million in unrestricted cash and total cash of $11 million. Shareholders’ equity increased to about $25.8 million.
“We are encouraged by our performance as we delivered another strong quarter, including our third consecutive quarter of profitability. This was led by initiatives that include accelerating our brand recognition and brand loyalty and growing sales distribution,” said CEO Joseph Dowling.
Product Development Progress
In addition to sales growth, CV Sciences is also making steady progress on the development of its product line. The company’s lead candidate drug is CVSI-007 that seeks to address the multibillion-dollar smokeless tobacco market. Progress on pre-clinical program means the company is a step away from filling an Investigational New Drug application sometime next year.
The company remains well positioned, financially, to pursue multiple drug development plans given the continued growth and profitability. The company also remains well financed to oversee all its clinical programs without pursuing any outside capital in the near term.
The only headwind that poses a significant danger to the stock’s sentiments in the market is an ensuing class action lawsuit. Law firm Faruqi & Faruqi, LLP is currently pursuing a class action lawsuit on allegations that the company did violate federal securities laws.
The lawsuit alleges that the company violated securities laws in relation to a patent application for CVSI-007. Mid a year research firm Citron Research did report in a tweet that the United Patent Office had issued a final rejection on the alleged CV Sciences Patent.
CB Sciences pullback might as well have presented an ideal buy opportunity for investors eyeing opportunities in the cannabis sector. The stock looks set to continue powering high, as a pullback play, on underlying fundamentals improving significantly.
Record sales and gross profit attest to a company that is in a phase of robust growth. That said the stock should continue climbing high as investors take note of the solid underlying fundamentals.
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Disclosure: We have no position in CVSI and have not been compensated for this article.