Pablo Zuanic from Cantor Fitzgerald maintained a Neutral rating on High Tide Inc., lowering its 12-month price target to C$2.75 from C$2.80, "given the overall sectoral derating and industry challenges."
"High Tide continues to consolidate the Canadian retail industry (Choom being the latest deal), is expanding its discount loyalty program, and is achieving double-digit same-store sales growth north of 20%. That said, given tough retail cannabis industry dynamics and a lack of visibility on medium-term profit margins and cash flow, we prefer to remain sidelined," Zuanic explained.
HITI’s Second Quarter: Retail Sales And 'Cash Burn' Increase
HITI's total sales in the July quarter were up 18% sequentially to $95.4 million, compared with CA $81 (US$61.1 million) in the prior quarter. On an annual basis, sales increased by 98% compared with sales in the third quarter of 2021 ($48.1 million).
The Canadian retail business grew 31% sequentially to $75 million (inc. M&A), compared with 23% sequential growth in the prior quarter and sales of $57 million.
“The company finished the quarter with 131 stores, and the loyalty program now has over 750,000 members, of which the company confirmed accounts for over 90% of daily transactions. Canadian retail sales growth …