DTEA - DavidsTea: Rally Likely To Continue With Major Catalysts Ahead - Buy On Setbacks
- Discussing strong quarterly report. Transformation efforts appear to go well as the company delivered a second consecutive quarter of positive adjusted EBITDA.
- Court recently extended the stay of all proceedings against the company to March 19, 2021 under the Canadian Companies’ Creditors Arrangement Act ("CCAA").
- Extension provides additional time to negotiate a successful plan of arrangement with creditors. Estimate for potential lease termination payments increased to almost $50 million.
- Future valuation will depend on the company successfully rebuilding its topline in a profitable manner. Should the transformation progress as planned, the stock could easily double from current levels.
- Speculative investors should use potential setbacks to initiate positions in DavidsTea as an anticipated creditor settlement and a strong Q4 report provide strong potential catalysts.
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DavidsTea: Rally Likely To Continue With Major Catalysts Ahead - Buy On Setbacks