Summary
- iAnthus Capital Holdings, Inc. develops cannabis dispensary facilities besides distributing and cultivating cannabis in the U.S.
- iAnthus Capital acquired MPX for more than $500 million and noted goodwill of $517 million. The goodwill is so significant that most analysts will see impairment risk.
- In Q3 and Q4 2019, the company expects to open new retail locations. As a result, revenue should increase once new stores start working.
- The market should be patient. Give the company some time to see whether the post-merger integration leads to cost reductions and value creation.
- Both companies will make a lot of effort. As a result, the financial figures in Q2, Q3 and Q4 2019 will most likely be better than those of Q1 2019.
With detrimental Q1 gross profit margin before fair value adjustments, iAnthus Capital (OTCQX:ITHUF) has not pleased investors in the first part of 2019. In our opinion, market participants need to wait a bit to see better financial figures. If the post-merger integration of MPX is properly done, both the gross profit margin and the operating margin will most likely improve. The company currently trades at 11x sales, which is cheap. The market appears to be forgetting several stock catalysts that could exist at the end of 2019.