Well, I hate to be the one to say I told you so, but, I told you so. A week and a half ago I mentioned that Growlife Inc. (OTCBB:PHOT) was on the verge of breaking away from its pack of marijuana-centric peers... names like Medical Marijuana Inc. (OTCMKTS:MJNA) and Cannabis Science Inc. (OTCMKTS:CBIS). Today it happened. PHOT shares are up nearly 20%, while CBIS and MJNA are basically flat. The catalyst? A lot more credibility.
This morning, an extensive research report on Growlife was published. Not a hype-creating, table-pounding look, but a true examination of the company's potential upside. That's not the big news in itself, though. The big news is the price target the analytical team established for PHOT - it's considerably higher than the current share price, at $0.22 versus the present price of $0.052 (and that's after the 20% pop).
The report doesn't just throw a random number out there in the ether, however. It's 55 pages of poking and prodding, leading to - for one thing - a revenue and earnings growth forecast through 2019. That projection concludes that if Growlife continues as it is, its current product menu in addition to growth through acquisitions will lead to a top line of $77 million in 2019, and a per-share profit of $0.03. For perspective, PHOT did $1.5 million in sales last year, and will likely do $5.4 million in sales this year thanks to some mid-year acquisitions.
Yes, that's a lot of growth in a relatively short period of time, but the report explains how it's more than feasible.
One of the biggest contributing factors to that growth, of course, is the continuing legalization of marijuana, not just for medicinal purposes, but also for recreational purposes. The report states "It is estimated that the market for marijuana in the United States alone is $35-$45 billion. We believe the size of the US medical marijuana market is estimated to be $1.7 billion, a figure that is likely to increase in the coming years. By 2016, the medical marijuana market could surge to approximately $8.9 billion."
The research report also offers a thorough overview of which states currently allow marijuana for medicinal reasons, which ones allow it for recreational use, and which ones are on the cusp of legalizing it. The inspection also shows a state-by-state breakdown of where the marijuana-using population lives, and how recent and impending legislation will define the opportunity Growlife Inc. is going to be facing now and in the future.
None of this is to say Medical Marijuana and Cannabis Science are hands-off trading opportunities, but after a review of today's report, it's pretty clear there are no other players in the industry that have the potential upside PHOT offers investors. You can see the whole report here.