Medical Marijuana Inc (OTCMKTS:MJNA) has announced that their AXIM Biotechnology company has received coverage initiation from SeeThruEquity, an equity research firm that focuses on microcaps. With their history on focusing more on speaking over megaphones through news releases rather than complying with needed audit reports for the OTC, we cannot avoid taking this coverage initiation with a grain of salt. That does not mean that we should wave off this interesting piece of news. Let us break this news coverage piece by piece.
SeeThruEquity coverage initiation forecasts robust growth. In its report, SeeThruEquity describes the macro-view of the cannabis-based markets as:
“ …emerging and quickly growing. Indeed, legal cannabis is among the fastest growing industries in the United States, estimated at $7.1 billion in 2016, including both medical and recreational uses, according to a report by New Frontier and ArcView Market Research. Longer term, the market has been forecast by Cowen to be as much as $50 billion within ten years, assuming federal legalization takes place in the United States.”
Regarding AXIM specifically:
“Axim is seeking to emerge with a distinct position in this market through its research and development activities and patented delivery systems, which benefit from more than 10 patents, 20 trademarks, and leverage more than 14 years of work and investment by the company and partners. “
Of course, MJNA President and CEO Dr. Stuart Titus said that “”We are thrilled to see a well respected Wall Street equities firm initiating coverage on AXIM Biotech. We have believed that AXIM would emerge as an up-and-coming biotech concern and quite excited about their cannabinoid research and pharmaceutical development activities. It is thrilling to see the investment community taking notice of AXIM’s emerging story and perceiving future value for investors.”
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What is the valuation of AXIM according to SeeThruEquity ?
“We initiate coverage of Axim with a price target of $17.00. We see Axim as an intriguing speculative company targeting the rapidly growing market for legal cannabis products with what appears to be differentiated intellectual property and bold development plans. The company has several key events ahead as it attempts to grow its nutraceutical and cosmetic product lines and advances its clinical pipeline led by MedChew. Management has also stated its intention to uplist to a national exchange, which would be a significant corporate milestone, if accomplished.”
This paints quite a rosy painting for AXIM.
But there is still a caveat. The apple does not fall far from the tree. AXIM also has some cash concerns; the difference is that AXIM is much more transparent than MJNA. MJNA’s beloved AXIM, according to the report, only has $.7mn(!) for end of Fiscal Year 2016 and current assets of $1.4mn. And there’s more; the report foresees that AXIM will require at least $20mn of additional capital over the next two years.
With MJNA suspicious habit of not publishing the audited financial data, and the huge gap of needed capital to be raised versus cash and assets on hand for AXIM, we cannot but take the report with reservations. In fact, MJNA has sent a notification of late filing just last May 15, 2017 for the Quarterly Report for first quarter ending on March 31, 2017. We will keep a close eye on this said report since it can affect the ranging trend of MJNA, but also the image of MJNA’s corporate responsibility on giving audited data. We wait with bated breath for this report.
Currently, MJNA is in a trading range with a bearish bias. There is a strong support line on .10 while nearest support is at .11. RSI does not confirm any strong overbought or oversold sentiment since it is at 47.25. Volume is still constant and the Bollinger Bands suggests a tightening trading range. For more news on $MJNA and other fast-moving penny stocks, please subscribe to FinanceRegistrar.com below.