Taglich Brothers Releases Updated Coverage on Cosmos Health: Projects Positive EPS for 2025 and Sets $3 Price Target, Nearly 300% Above Current Share Price

Rhea-AI Summary

Taglich Brothers has released an updated research report on Cosmos Health (NASDAQ:COSM), maintaining a Speculative Buy rating with a $3 price target. The report projects 25% revenue growth to $68.4 million in FY 2025, up from an estimated $54.7 million in FY 2024. The company expects significant improvements in financial metrics, including gross margin expansion to 19.4% and positive EPS of $0.01 in 2025. Growth drivers include Cana Laboratories investments, projected to generate over $10 million in annual gross profit at full capacity, and expanded distribution agreements across Europe and Middle East. The company's stock currently trades at 0.2x sales, below the sector average of 2.1x.

Positive

• Projected 25% revenue growth to $68.4M in FY 2025
• Expected transition to profitability with $235,000 net income in 2025
• Anticipated gross margin improvement from 8.7% to 19.4%
• Projected positive adjusted EBITDA of $3.5M in 2025
• Expected positive operating cash flow of $1.8M in 2025
• Cana Laboratories projected to generate $10M+ in annual gross profit

Negative

• Projected net loss of $15M for FY 2024
• Negative adjusted EBITDA of $3M expected in 2024
• Negative operating cash flow of $2.1M forecasted for 2024
• Potential dilution risk from warrant exercises

Insights

Financial Analyst

The Taglich Brothers coverage update reveals significant potential upside for Cosmos Health, but investors should approach with caution. The projected 25% revenue growth to $68.4 million in 2025 is ambitious, particularly given the company's current market cap of just $17 million. The forecasted transition from a $15 million loss in 2024 to positive earnings in 2025 hinges heavily on successful execution of cost rationalization and growth initiatives.

The valuation gap is striking - trading at 0.2x sales versus the sector's 2.1x multiple suggests either significant undervaluation or market skepticism. The $10 million recurring gross profit projection from Cana Laboratories would be transformative if achieved, representing a substantial portion of current market value. However, the 300% upside target requires multiple expansion alongside operational execution, making this a high-risk, high-reward scenario.

Market Research Analyst

The most compelling aspect is the projected margin expansion, with gross margins expected to more than double from 8.7% to 19.4% while operating expenses shrink from 24.5% to 18.6%. This operational leverage, if achieved, would be transformative. The European and Middle East expansion plans for nutraceutical and disinfectant brands provide geographic diversification, though success in these markets isn't guaranteed.

The $3.5 million adjusted EBITDA target for 2025 implies a significant operational turnaround. Current trading multiples suggest the market is pricing in execution risk, making the stock a potential value play if management delivers on its strategic initiatives. The positive cash flow projection of $1.8 million would mark a important inflection point for sustainable growth.

CHICAGO, IL / ACCESSWIRE / November 26, 2024 / Cosmos Health Inc. ("Cosmos Health" or the "Company'') (NASDAQ:COSM), a diversified, vertically integrated global healthcare group engaged in innovative R&D, owner of proprietary pharmaceutical and nutraceutical brands, manufacturer and distributor of healthcare products, and operator of a telehealth platform, announced today that, on November 25, 2024, Taglich Brothers, Inc. ("Taglich") published an updated research report on the Company's common stock.

Key highlights from Taglich's report include:

• Speculative Buy rating with a $3 price target, suggesting a fourfold increase in the share price over the next 12 months.

• Significant growth projected, with FY 2025 revenue expected to rise by 25%, reaching $68.4 million, up from an estimated $54.7 million in FY 2024.

• Key growth drivers include investments in Cana Laboratories, projected to generate over $10 million in recurring annual gross profit at full capacity, alongside expanded distribution agreements for the Company's nutraceutical and disinfectant brands, including C-Sept, across Europe and the Middle East.

• Cost rationalization program, initiated in the second half of 2024, is expected to boost gross margin to 19.4% (up from 8.7% in 2023) and improve operating expense margin to 18.6% (down from 24.5% in 2023).

• Positive net income and earnings per share (EPS) of $235,000 and $0.01, respectively, are anticipated in 2025, accompanied by positive adjusted EBITDA of $3.5 million and positive net cash provided by operating activities of $1.8 million. This marks a significant improvement compared to the forecast for FY 2024, which projected a net loss of $15 million, or ($0.78) per share, negative adjusted EBITDA of $3 million, and negative cash from operating activities of $2.1 million.

• Trading at a discount to sector benchmarks: Trailing price-to-sales multiple stands at 0.2x, significantly below the sector average of 2.1x for companies in the medical distribution and drug manufacturing industries.

• Valuation expected to improve as the Company achieves forecasted 25% revenue growth in 2025, reduces expenses, transitions to operating profitability, and begins generating positive cash earnings, with investors likely to assign a multiple closer to sector averages.

• Price target methodology: To arrive at a year-ahead price target of approximately $3.00 per share, Taglich applied a 1.3x price-to-sales multiple to their 2025 sales forecast of $2.92 per share, factoring in execution risks and potential dilution from warrant exercises.

Greg Siokas, CEO of Cosmos Health, stated: "I am pleased that Taglich Brothers' analysis aligns with our internal projections. Their report highlights the value in our strategic plan, underpinned by a projected 25% revenue growth in 2025. This growth is driven by key initiatives, including new contract manufacturing agreements at Cana and the global expansion of our proprietary brands. Taglich also underscores the significance of our cost rationalization efforts and strategic investments. Combined with robust revenue growth, these initiatives are expected to result in positive operating cash flow and positive EPS in 2025, marking a pivotal inflection point for Cosmos. Importantly, Taglich has set a price target of $3 per share, representing a fourfold increase from our current share price. Bridging this gap remains a top priority."

About Cosmos Health Inc.

Cosmos Health Inc. (Nasdaq:COSM), incorporated in 2009 in Nevada, is a diversified, vertically integrated global healthcare group. The Company owns a portfolio of proprietary pharmaceutical and nutraceutical brands, including Sky Premium Life®, Mediterranation®, bio-bebe®, C-Sept® and C-Scrub®. Through its subsidiary Cana Laboratories S.A., licensed under European Good Manufacturing Practices (GMP) and certified by the European Medicines Agency (EMA), it manufactures pharmaceuticals, food supplements, cosmetics, biocides, and medical devices within the European Union. Cosmos Health also distributes a broad line of pharmaceuticals and parapharmaceuticals, including branded generics and OTC medications, to retail pharmacies and wholesale distributors through its subsidiaries in Greece and the UK. Furthermore, the Company has established R&D partnerships targeting major health disorders such as obesity, diabetes, and cancer, enhanced by artificial intelligence drug repurposing technologies, and focuses on the R&D of novel patented nutraceuticals, specialized root extracts, proprietary complex generics, and innovative OTC products. Cosmos Health has also entered the telehealth space through the acquisition of ZipDoctor, Inc., based in Texas, USA. With a global distribution platform, the Company is currently expanding throughout Europe, Asia, and North America, and has offices and distribution centers in Thessaloniki and Athens, Greece, and in Harlow, UK. More information is available at www.cosmoshealthinc.com, www.skypremiumlife.com, www.cana.gr, www.zipdoctor.co, as well as LinkedIn and X.

Forward-Looking Statements

With the exception of the historical information contained in this news release, the matters described herein, may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements preceded by, followed by, or that otherwise, include the words "believes," "expects," "anticipates," "intends," "projects," "estimates," "plans" and similar expressions or future or conditional verbs such as "will," "should," "would," "may" and "could", are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing. These statements, involve unknown risks and uncertainties that may individually or materially impact the matters discussed, herein for a variety of reasons that are outside the control of the Company, including, but not limited to, the Company's ability to raise sufficient financing to implement its business plan, the impact of the COVID-19 pandemic and the war in Ukraine, on the Company's business, operations and the economy in general, and the Company's ability to successfully develop and commercialize its proprietary products and technologies. Readers are cautioned not to place undue reliance on these forward-looking statements, as actual results could differ materially from those described in the forward-looking statements contained herein. Readers are urged to read the risk factors set forth in the Company's filings with the SEC, which are available at the SEC's website (www.sec.gov). The Company disclaims any intention or obligation to update, or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Disclaimer

All research issued by Taglich Brothers is based on public information. The Company does not undertake the responsibility to advise you of changes in figures or in their views. The Company pays a fee of $3,000 per month for 12 months for research coverage, which includes the creation and dissemination of research reports. This is not a solicitation of any order to buy or sell. Taglich Brothers, fully disclosed with its clearing firm, Axos Clearing, LLC, is not a market maker and does not sell to or buy from customers on a principal basis. There is no guarantee that the target price for the stock will be met or that the predicted business results for the Company will occur. There may be instances when fundamental, technical, and quantitative opinions contained in Taglich Brothers' reports are not in concert. Taglich Brothers does not currently have an Investment Banking relationship with the Company and was not a manager or co-manager of any offering for the Company within the last three years.

Investor Relations Contact:

BDG Communications
cosm@bdgcommunications.com
+44 207 0971 653

SOURCE: Cosmos Health Inc.

View the original press release on accesswire.com

FAQ

What is Taglich Brothers' price target for Cosmos Health (COSM) stock?

Taglich Brothers set a price target of $3.00 per share for Cosmos Health (COSM), representing approximately 300% upside from current levels.

What revenue growth is projected for Cosmos Health (COSM) in 2025?

Cosmos Health is projected to achieve 25% revenue growth in FY 2025, reaching $68.4 million compared to an estimated $54.7 million in FY 2024.

When does Cosmos Health (COSM) expect to achieve positive earnings per share?

Cosmos Health is expected to achieve positive earnings per share of $0.01 in 2025, transitioning from a projected loss of ($0.78) per share in 2024.

How does Cosmos Health's (COSM) price-to-sales ratio compare to its sector?

Cosmos Health trades at a price-to-sales multiple of 0.2x, significantly below the sector average of 2.1x for medical distribution and drug manufacturing industries.