On Tuesday, Roth/MKM maintained its Buy rating on High Tide Inc. (NASDAQ: NASDAQ:HITI) with a price target of $4.50. The endorsement follows a series of investor meetings last week with High Tide's CEO, Raj Grover, which came after the company reported a strong quarterly performance, including free cash flow (FCF) of $5.7 million.
The firm highlighted several key points from the discussions with Grover. High Tide plans to expand its Canadian retail footprint, aiming to double its national store count to 300. This growth is expected to be supported by increasing FCF, which should enable organic expansion and help the company to gain further market share.
Additionally, High Tide is focusing on enhancing the monetization of its discount ELITE membership program. The company also has a strategic plan to strengthen its financial position by reducing its debt, which is part of its broader efforts to de-lever its balance sheet.
Looking ahead, Roth/MKM pointed out that High Tide has potential opportunities in the United States and Germany, which could materialize in 2024. These prospects are currently not reflected in the company's valuation, according to the firm.
InvestingPro Insights
Following Roth/MKM's reaffirmation of a Buy rating for High Tide Inc. (NASDAQ: HITI), insights from InvestingPro further bolster the optimistic outlook for the company's financial health and market position. The valuation of High Tide suggests a strong free cash flow yield, aligning with the reported $5.7 million FCF in the recent quarterly performance. This robust FCF is a key driver for the planned expansion of High Tide's retail footprint in Canada, with ambitions to double the store count to 300 locations.
InvestingPro data indicates a significant revenue growth of 36.66% in the last twelve months as of Q4 2023, which complements the company's expansion goals. Additionally, the company's stock has experienced a large price uptick over the last six months, with a 49.59% total return, reflecting a positive market sentiment that could be leveraged to attract further investment. Despite not paying a dividend, the company's strategic focus on growth and profitability, as evidenced by analysts predicting profitability this year, may appeal to growth-oriented investors.
InvestingPro Tips highlight that High Tide is trading at a low revenue valuation multiple, which suggests that the market may not have fully appreciated the company's growth potential. This could present an attractive entry point for investors seeking exposure to the cannabis retail sector. It's worth noting that the company has had a strong return over the last three months, with a 26.9% total return, underscoring the positive momentum behind High Tide's stock.
To gain deeper insights and access additional InvestingPro Tips for High Tide Inc., investors can visit https://www.investing.com/pro/HITI. For those interested in an InvestingPro+ subscription, use coupon code SFY24 to get an additional 10% off a 2-year subscription, or SFY241 to get an additional 10% off a 1-year subscription. There are currently 6 additional tips listed in InvestingPro that could further inform investment decisions regarding High Tide.
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