InterCure: A Cannabis Industry Leader Still Flying Under The Radar

Company Overview - InterCure is a leading pharmaceutical/medical cannabis company based in Israel, publicly traded on Nasdaq and the Tel Aviv Stock Exchange [3] - The company is vertically integrated, involved in producing, manufacturing, and distributing GMP-compatible cannabis products [3] - InterCure's largest production facility is located near the Gaza Strip, currently partially operational due to military activities, with a pre-invasion capacity of 7 tons per year and a maximum potential of 88 tons [3] - The northern facility has a production capacity of approximately 3 tons, with a maximum of 10 tons [3] - InterCure is entitled to full compensation from the Israeli government for damages incurred due to the state of war [3] Recent Performance - Despite a challenging environment due to the Hamas attack, InterCure reported a 9% decline in revenue and EBITDA for FY 2023 compared to 2022, which exceeded preliminary estimates [6] - The stock price experienced a significant drop to an all-time low of $1 but has since recovered to $3.73, indicating market recognition of its undervaluation [8] - The company has successfully resolved legal issues with Cannolam, gaining full ownership, while another case remains active [6] Industry Developments - The pharmaceutical/medical cannabis industry is in early growth stages, with a market size estimated at approximately $3.4 billion in 2023 and a projected CAGR of 53.3% through 2030 [7] - Regulatory progress is being made, with Germany's recent removal of cannabis from the list of narcotics and anticipated rescheduling in the US [7] - InterCure is positioned to benefit from these developments, with plans to launch products in Germany and potential expansion into recreational cannabis [5][7] Valuation - InterCure's current P/S ratio is 0.98, significantly lower than the pharmaceuticals sector median of 3.55, suggesting a potential valuation closer to 2 P/S [8] - Conservative future valuation scenarios for 2030 include estimates of $374 million at 10% CAGR, $688 million at 20% CAGR, and $1.2 billion at 30% CAGR [8] - The company is currently valued at $96 million, indicating a compelling investment opportunity given its growth potential [8]