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Investing.com - Stifel Canada has downgraded GURU Organic Energy Corp (TSX:GURU) (OTC:GUROF) from Buy to Hold while raising its price target to C$4.50 from C$4.00.
The downgrade follows a substantial price surge, with GURU shares tripling over the past two months to reach C$5.92 on Wednesday, a three-year high. This performance significantly outpaced the TSX Composite, which gained only 9% during the same period.
According to Stifel Canada, the stock’s appreciation was driven by strong Q3 FY25 results that showed accelerating sales growth and positive adjusted EBITDA for the first time since 2021. However, the research firm does not expect these trends to be sustainable, suggesting the share price increase may be overextended.
GURU currently trades at 4.7 times forward sales, twice its four-year average and slightly below competitor Celsius at 5.5 times. Stifel notes this valuation gap of 0.8x forward sales is narrower than the historical 5x spread seen over three and five-year averages.
The research firm believes GURU should trade at a larger discount to Celsius, citing GURU’s slower growth rate and marginal profitability compared to Celsius’s 22% EBITDA margin as justification for the rating change.
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