INCR Stock Has Bright Outlook
Cannabis stocks have been taking a beating lately, but that isn’t because cannabis sales haven’t been robust globally. It’s because the potential federal U.S. legalization of marijuana has been bogged down, and investors are only so patient.
The U.S. and Canada are by far the largest markets for legal pot, but Israel has been a pioneer in medical cannabis research and development for over 50 years. In addition to legalizing medical marijuana for a wide variety of treatments, Israel has decriminalized the use of cannabis for those over the age of 18 when used in private.
The number of authorized medical marijuana patients in Israel exploded from 32,000 in 2019 to approximately 110,000 in 2021. Last year, Israel’s medical cannabis market was valued at $264.0 million, just $7.0 million less than the whole European medical cannabis market. (Source: “Israeli Bigwigs Eye Profits From Marijuana Legalization,” Bloomberg, February 2, 2022.)
One great way to play Israel’s burgeoning marijuana industry is through InterCure Ltd (NASDAQ:INCR), which does business as Canndoc. It’s the most profitable and fastest-growing cannabis company outside North America.
Just don’t judge the company by its share price, at least not right now. As of this writing, InterCure stock is down by:
- 21% over the last month
- 26% over the last six months
- 35% over the last year
Chart courtesy of StockCharts.com
Ugly, but not out of the ordinary. The ETFMG Alternative Harvest ETF (NYSEARCA:MJ), which is the world’s largest cannabis exchange-traded fund (ETF), is down by 50% year-to-date and 66% year-over-year.
But the outlook for INCR stock is worth noting. Even the conservative analysts on Wall Street expect InterCure stock to experience tremendous growth.
Analysts are providing a 12-month share-price target for InterCure Ltd in the range of $11.50 to $13.00 per share, suggesting potential upside in the range of 142% to 175%.
It’s not difficult to see why Wall Street is bullish on INCR stock. InterCure Ltd continues its report record financial results.
In the second quarter, the company’s revenue more than doubled year-over-year and its earnings jumped by 160% year-over-year, marking InterCure Ltd’s 10th consecutive quarter of profitable revenue growth. Moreover, the company reported its eighth consecutive quarter of positive cash flow from operations.
The only caveat is that ongoing regulatory hurdles mean it’s difficult for companies to import cannabis. Despite the potential supply chain issues, InterCure’s management expects the company’s record pace to continue throughout the remainder of this year.
About InterCure Ltd
InterCure is the largest marijuana company in Israel and, as mentioned earlier, the fastest-growing marijuana company outside North America. The company offers medical-grade dried marijuana flower and cannabis oils. (Source: “Overview,” InterCure Ltd, last accessed September 14, 2022.)
In February, InterCure announced plans to acquire Cann Pharmaceutical Ltd., an Israeli-based, multinational medical marijuana company, also known as Better. The transaction is expected to close in the third quarter. (Source: “InterCure Signs Definitive Agreement to Acquire Multi-National Medical Cannabis Producer ‘Better’,” InterCure Ltd, February 16, 2022.)
In March, InterCure announced a multiyear international cultivation, marketing, and distribution agreement with Clever Leaves Holdings Inc (NASDAQ:CLVR). Under the agreement, Clever Leaves will cultivate InterCure’s marijuana strains for the launch of InterCure’s branded products in the EU, U.K., and South America. (Source: “InterCure and Clever Leaves Announce International Strategic Partnership,” InterCure Ltd, March 22, 2022.)
In June, InterCure opened its first flagship “Cookies” pharmacy in Vienna, Austria. The location sells a number of cannabidiol (CBD) products, as well as clothing and lifestyle products. The company will launch other products in Austria as cannabis regulations evolve in the country. The pharmacy in Vienna is the beginning of InterCure’s expansion into additional European countries. (Source: “InterCure and Cookies Launch Flagship Retail Location in Vienna, Austria,” InterCure Ltd, June 21, 2022.)
Other recent business highlights include:
- The grand opening of a Cookies pharmacy in Be’er Sheva, the largest city in Israel’s southern region
- The addition of a new pharmacy in the northern Israeli city of Nahariya
- The enlargement of InterCure Ltd’s Southern facility’s post-harvest area, nursery, and grow houses
- The addition of 12 new high-demand cannabis strains into the company’s growth cycles
- The launch of four new premium branded products
Record Run in Second Quarter
InterCure kicked off 2022 with record first-quarter results and then continued its trajectory with record second-quarter results.
The company announced that its second-quarter revenue jumped by 119% year-over-year to a record CA$37.5 million. This represents an annual run rate of CA$150.0 million. (Source: “InterCure Reports Record Breaking Second Quarter Financial Results,” InterCure Ltd, August 15, 2022.)
InterCure Ltd’s second-quarter net income rallied by 160% year-over-year to CA$6.0 million while its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) advanced 89% to CA$8.7 million.
The company ended the second quarter with CA$96.0 million in cash on hand.
InterCure Ltd’s numbers for the first half of this year were just as impressive, with revenue up by more than 130% year-over-year to a record CA$72.0 million. The company’s gross profits went up by more than 120% year-over-year to above CA$30.0 million, while its adjusted EBITDA doubled to CA$17.0 million.
Commenting on the record financial results, InterCure Ltd’s CEO, Alexander Rabinovitch, said, “We are proud to deliver our tenth consecutive quarter of profitable growth, solidifying our operational excellency and leading position.” (Source: Ibid.)
Management expects the company’s revenue to increase in the third and fourth quarters.
Analyst Take
InterCure stock has been beaten down even though the company has been doing everything right.
InterCure Ltd has a solid balance sheet, it continues to report record financial results, it has successfully ramped up its operations, and it has expanded globally at a fast speed in order to meet the high demand for its products.
All this indicates that INCR stock is worth watching.
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