Beacon Securities analyst Doug Cooper likes the market share gains on display from Canadian cannabis retailer High Tide (High Tide Stock Quote, Charts, News, Analysts, Financials TSXV:HITI). In an update to clients on Thursday, Cooper maintained a “Buy” rating on the stock while lowering his target price from $5.50 to $4.50 per share based on his updated revenue and EBITDA forecasts.
High Tide, which currently has 151 stores across BC, Alberta, Saskatchewan, Manitoba and Ontario and a number of e-commerce platforms, announced on Monday its fourth quarter and fiscal year-end 2022 financials, posting revenue of $108.2 million, up 101 per cent year-over-year. Adjusted EBITDA was up 206 per cent to $5.0 million and the company’s loss per share was $0.85 compared to a loss of $0.09 a year earlier.
High Tide said its bricks-and-mortar locations posted same store sales growth of 50 per cent year-over-year and nine per cent sequentially and the company’s annual revenue run rate is now over $450 million.
“While these numbers demonstrate exponential revenue growth, it’s also important to note that we have maintained adjusted EBITDA level profitability for 11 consecutive quarters and that we were cash flow positive from operations during the last fiscal year,” said President and CEO Raj Grover in a press release.
“In our opinion, this is because we have the strongest retail concept in Canadian cannabis, something that is backed up by the fact that our Cabana Club loyalty program now has approximately 950,000 members across 151 Canadian stores,” he said.
Cooper said the Q4 results arrived better than expected and he estimated average cannabis revenue per store was at $739,000, up from $638,000 in the third quarter and $475,000 in the Q1, with HITI’s stores reaching their maturity.
“We continue to be encouraged by the market share gains in its Canadian retail stores where revenue was +16 per cent quarter-on-quarter and +67 per cent versus Q1,” Cooper wrote.
“Just looking at cannabis sales from Ontario, Alberta, BC, Sask and Manitoba and comparing them to HITI’s Canadian sales, its market share has grown from 6.4 per cent in Q1 to 7.4 per cent in Q2, 8.8 per cent in Q3 and ten per cent in Q4. These are very significant share gains for the company,” he said.
Cooper said with a relatively strong balance sheet, High Tide is looking good to continue growing its store count both organically and through M&A. Looking ahead, Cooper is forecasting fiscal 2023 revenue at $467.8 million and adjusted EBITDA at $25.4 million. His new $4.50 target represented at press time a projected one-year return of 109 per cent,