High Tide has “all the pieces in place”, this analyst says

Beacon Securities analyst Doug Cooper says High Tide’s (High Tide Stock Quote, Chart, News, Analysts, Financials TSXV:HITI) second quarter was a major inflection point, with several key metrics reaching their best levels in two years.

In a June 16 update, Cooper maintained his “Buy” rating and $7.50 target on High Tide.

“We believe all of the pieces are in place to drive to that result on a run-rate basis towards the end of next year,” Cooper said.

High Tide reported Q2 revenue of $179.3-million, up 30% year-over-year and 1% sequentially, ahead of expectations. Adjusted EBITDA was $13.9-million, also better than expected, driven mainly by improved margins at Remexian.

Cooper estimates shareholder EBITDA was about $12.3-million, up 53% year-over-year, reflecting High Tide’s 51% ownership of its German subsidiary.

Remexian revenue rose 27% sequentially to about $31.8-million, with 7.6 tonnes sold in the German medical cannabis market. Cooper said the company believes it now has about 14% market share in Germany and could reach 20% over time.

High Tide ended the quarter with 221 stores and has since opened three more and agreed to acquire four Northern Helm locations, bringing its total store count to 228, including 103 in Ontario. Cooper said High Tide still expects to open 20 to 30 new stores this year.

The analyst also sees potential for further Canadian retail gains after a recent ruling requiring SNDL to divest its Value Buds retail segment.

“We believe HITI would be a logical buyer,” Cooper said. “Outside of it and FIKA, we believe there are not many potential suitors.”

Consolidated gross margin was 27.4%, up 200 basis points sequentially and the best result in two years. EBITDA margin was 7.8%, also the best in two years and an all-time high in absolute dollars.

Cabana Club membership rose 40% year-over-year to 2.65 million, while Elite membership increased 84% to 178,000. High Tide ended the quarter with $37-million in cash and net debt of about $15-million, and has signed a new $40-million debt facility with BMO.

“While the stock is inexpensive based on its strong Q2 results, we believe, in fact, that the quarter was also a major inflection point for the company with many KPIs hitting their best results in 2 years,” Cooper said.

Cooper said High Tide trades at about six times fiscal 2026 EBITDA and about four times his estimated run-rate earnings power by the end of fiscal 2027.

He expects High Tide to generate Adjusted EBITDA of $54.5-million on revenue of $743.9-million in fiscal 2026, improving to Adjusted EBITDA of $67.2-million on revenue of $834.0-million in fiscal 2027.

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