On Thursday, IM Cannabis Corp. (NASDAQ:IMCC) maintained its Buy rating and a $6.00 price target, following a report on the company’s second-quarter 2024 revenue. The firm noted that IM Cannabis achieved a 12% year-over-year increase in revenue, reaching C$14.8 million. This growth was significantly bolstered by a 129% surge in sales in Germany, as the company shifts its focus and resources towards the more lucrative German market.
Despite the positive trend in Germany, the company's overall margins were affected by the need to offload inventory in Israel, resulting in lower profitability. However, the company's position in the German market is strong, where it is ranked as the sixth distributor. The firm's growth in Germany is reportedly surpassing expectations.
The analyst from Roth/MKM highlighted that while IM Cannabis is capitalizing on the opportunities in Germany, the company's potential is somewhat constrained by limited access to supply in the near term. Nonetheless, the firm's current market activities and strategic direction have led to the decision to reaffirm the Buy rating and the $6.00 price target.
IM Cannabis’s performance in Germany has been a key driver of its recent success, with the company's efforts to realign its offerings and resources towards this market paying off. The company's stable presence in Israel continues, although it faces challenges that affect its margin performance.
The Roth/MKM analyst concluded that despite these challenges, IM Cannabis is well-positioned to continue its growth trajectory, especially in the German market, which has been a strong point for the company. The maintained Buy rating and price target reflect confidence in the company's strategic focus and market execution.
In other recent news, IM Cannabis reported its second-quarter 2024 financial results, highlighting a significant growth in the German market following the legalization of cannabis. The company saw a 200% increase in sales in Q2 compared to Q1 2024, and plans to focus its efforts on the German market for future growth.
Despite an 11.7% increase in revenue compared to the same quarter in the previous year, IM Cannabis reported a decrease in gross profit due to inventory clearance and slow-moving stock. The company also noted a reduction in adjusted EBITDA loss, net loss, and diluted loss per share compared to Q2 2023.
However, cash and total assets saw a decline, primarily due to the cancellation of the Oranim agreement. IM Cannabis plans to finance its operations through existing capital and credit facilities. The company anticipates potential price compression in the German market but currently enjoys a gross margin of around 40%. Despite facing some financial headwinds, management remains focused on optimizing their market position, particularly in premium segments.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.