TerrAscend Corp (OTCMKTS: TRSSF) is primed for further gains after a long period of consolidation in the market. After an excellent start to the year that resulted in a 50% plus spike, the stock resorted to trading sideways after clocking 2019 highs.
TRSSF Catalysts and Price Action Analysis
The serving of an earnings report signaling underlying growth and operational efficiency is one of the catalysts that could trigger another leg higher on price action. Q1 earnings report indicate that the Company did achieve organic growth, integrated best in class businesses and scaled operations, developments that underscore long-term prospects.
TerrAscend delivering record revenues for the first three months of the year is another development that continues to excite investors, likely to have a positive impact on price action activity. The Company has since secured Good Manufacturing License paving the way for it to embark on cannabis commercialization drive in Europe.
The stock spiking high in view of recent developments would not come as a surprise. Price action activity indicates that the $6.30 mark is the immediate resistance level, standing in the way of the stock making a run for this year highs.
The stock rallying and taking out the $ 6.90 resistance level could trigger further rallies in continuation of the emerging uptrend. Above the $6.90 mark, TerrAscend would have turned bullish and likely to make a run for 52-week highs as a pullback play.
What Does TerrAscend Corp Do?
TerrAscend is a biopharmaceutical and wellness company engaged in the cultivation development and sale of medical cannabis. The Company offers products under the Knuba Naturals brand in addition to offering education and support programs to physicians and patients.
Record Revenues Boost
TerrAscend Corp is a potential bounce-back play after a long period of consolidation on underlying fundamentals turning bullish. The Company delivering record revenues for the first three months of the year affirm why the stock could re-rate higher on renewed investor interest.
First quarter revenue nearly tripled to $14.6 million from $5 million generated in the fourth quarter. Revenue growth benefited from the purchase of Arise Bioscience assets. Strong demand in both medical and adult use markets also had a hand in fuelling sales growth.
TerrAscend Corp succumbed to an adjusted EBITDA loss of -$7.2 million in the quarter compared to a loss of -$1.6 million in the comparable quarter last year. The Company exited the quarter with cash and cash equivalent amounting to $8.6 million.
According to Mathew Johnson, president of TerrAscend Corp, first quarter results underscore progress made in the race to becoming a leader in the North American cannabis sector. The Company is closing in on the acquisition of The Apothecarium that will support and enhance cannabis cultivation operations.
“The foundational capabilities of our US and Canadian businesses, coupled with future acquisitions and the procurement of Greenfield licenses, will firmly establish TerrAscend global presence. We’re committed to continuing our hard work in order to exceed the expectations of our patients, customers, and stakeholders,” said Mr. Johnson.
Europe GMP Boost
Accelerated sales growth has since received a boost on TerrAscend securing EU GMP certification. With the certification, the Company can now commercialize its cannabis products in the region. The Company joins a select number of Canadian companies that have secured authorization to pursue CBD sales opportunities in the regions burgeoning marketplace.
In addition, TerrAscend has closed a $69 million non-brokered private placement. The Company issued 9 million common shares priced at $7.64 a share. The Company intends to use gross proceeds from the offering to finance its acquisition strategy. Part of the funds will also go towards financing working capital as well as for general corporate purposes.
TerrAscend appears to have hit a critical support level from where it looks set to climb higher after a long period of consolidation. The stock is likely to register fresh gains as a flurry of positive developments continues to affirm long-term prospects.
Record revenues and an expansion drive into Europe are some of the developments that continue to shore up market sentiments likely to fuel further upside action. For investors eyeing opportunities in the cannabis sector, TerrAscend is an ideal pick as it is trading at a discount relative to its long-term prospects.
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Disclosure: We have no position in TRSSF and have not been compensated for this article.