Organigram shares soared more than 35% Wednesday and helped lift the broader cannabis sector higher, after the company’s first-quarter revenue more than doubled and beat analyst estimates.

“A return to the Organigram of old,” is how Jefferies analyst Owen Bennett described the numbers.

“Given the high bar they had set themselves and two quarters of declining financials, this print should be a relief that headwinds were temporary and supports our confidence which sees OGI OGI, +45.37%  as one of our preferred picks in the cannabis industry,” Bennett wrote in a note to clients.

Organigram posted net revenue of C$25.2 million ($19.3 million) for the quarter to end November, up from C$12.4 million a year ago, beating the FactSet consensus estimate of C$21 million. The previous year’s quarter, which also ended the last day of November, included just over a month of recreational cannabis sales, which began in Canada on Oct. 17, 2018.

Organigram did not offer a net loss number, but said its net loss from continuing operations came to C$900,000, which amounts to $0.006 a share, versus net income from continuing operations of C$29.5 million, or C$0.195 a share. There are not enough FactSet estimates to form a reliable consensus for per-share earnings.

For more, read: Marijuana producer Organigram stock soars 30% as sales double

On its earnings call with analysts, the company said it expects to introduce cannabis-infused chocolates in the second quarter, already has vapes on sale in some provinces, and will use bulk sales to diversify revenue.

CIBC analysts said the numbers were “surprisingly encouraging” coming in a difficult operating environment.

Understanding the Challenges for Canadian Cannabis Businesses

 

Understanding the Challenges for Canadian Cannabis Businesses

“Our only concerns out of the quarter are a capital projects to-do list that should see spending remain stubbornly high, and questionable timing of equity financing,” analysts John Zamparo and Krishna Ruthnum wrote in a note to clients. They reiterated an outperform rating on the stock and C$5 price target.

Jefferies rates the stock as buy and also has a C$5 price target.

Read: Shorting cannabis stocks was a billion-dollar idea in 2019

Aphria Inc.’s U.S.-listed shares APHA, +5.01% APHA, +6.01%  rose 4.8%, after CIBC upgraded the stock to neutral from underperform and said it is more constructive now that the company has made an “inevitable cut to guidance.

“There will be issues to contend with, such as ongoing elevated capex spend and substantial working capital investments,” the cannabis analysts wrote in a note. “But the balance sheet is relatively strong and market share gains are encouraging.”

They raised their price target on the stock to C$7.00 from C$6.50. The company’s revised guidance—it now expects 2020 revenue of C$575 million to C$625 million versus earlier guidance of C$650 million to C$700 million—is “much more achievable” although it may not be conservative enough, the analysts wrote. But with consensus below the new range, future guidance risk has moderated, said the note.

See: Aphria stock slides on weaker-than-expected earnings, but other cannabis shares shine

Curaleaf U.S.-listed shares CURLF, +1.77% CURA, +1.46%  rose 1.5%, after the company said it has closed an upsized $300 million senior secured term loan facility with an interest rate of 13% per annum. Proceeds of the deal will be used to refinance existing debt, pay fees and expenses from previously announced acquisitions, to fund capex and for general corporate purposes.

“Most importantly we strengthened our balance sheet without diluting our existing shareholders,” Chief Executive Joseph Lusardi said in a statement.

Cannabis companies have been struggling to raise capital of late after a sharp correction in the sector, which has been developing more slowly than expected and continues to compete with the black market. A number of companies, including Aurora Cannabis, have been forced to carry out highly dilutive financings.

In Washington Wednesday, the House Committee on Energy & Commerce is holding a hearing on cannabis policies for the new decade. The hearing is expected to consider a range of issues from medical cannabis as a treatment for a variety of ailments, including mental-health issues suffered by veterans. Speakers from the Drug Enforcement Administration and Food and Drug Administration are expected to testify.

Elsewhere in the sector, Tilray shares TLRY, +0.56% were up 0.1%, Canopy Growth shares CGC, -0.48% WEED, +4.24% were up 3%, Aurora Cannabis ACB, +0.98% ACB, +15.45% was up 9.5%, Cronos Group Inc. CRON, +0.60% CRON, +5.71% rose 7% and Aleafia was up 6%.

Read now: Marijuana companies are bad at forecasting, analyst says

See: Aurora Cannabis now has a $1 price target from two analysts

More broadly, the exchange-traded fund ETFMG Alternative Harvest ETF MJ, +5.40% rose 3.5%, with 33 of its 38 components trading higher. The Horizons Marjiuana Life Sciences Index HMMJ, +6.48%  gained 4.3%, as 54 of its 58 components gained.

The S&P 500 SPX, +0.19% was up 0.5% and the Dow Jones Industrial Average DJIA, +0.31% was up 0.6%.