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IM Cannabis Gets Initial Buy Rating From Alliance Global Partners

IM Cannabis is 'an international play on legal cannabis,' Alliance Global Partners says.
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IM Cannabis  (IMCC) - Get IM Cannabis Corp Report climbed after Alliance Global Partners initiated coverage of the Israel-based company with a buy rating and a $10 price target.

Shares of the Tel Aviv company ended the regular session up 2.7% at $5.99.

"We see IMCC as an international play on legal cannabis, with the company particularly well-positioned to benefit from the growing Israeli medical market, and potential adult-use market in the country," analyst Aaron Grey said in a research note. 

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Changes to the Israeli medical laws in April 2019, including easing prescription procedures and the sale of cannabis in pharmacies, caused a significant ramp in patient count, more than doubling to 92,000, Grey said.

"While we see the medical market as continuing to grow at a healthy clip, the prospects of adult-use in the country is encouraging as the recent coalition formed included cannabis reform in negotiations," Grey said.

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IMCC’s German operations continue to ramp, the analyst said, and Grey believes it will be more of a 2022 growth driver. He sees IMCC leveraging distribution partnerships in Germany and other European Union markets as legalization occurs.

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While the COVID-19 pandemic has had an impact of Germany's medical market, Grey said there is opportunity for the market to continue to grow, particularly once COVID restrictions ease.

"Meanwhile, recent acquisitions increase the company’s exposure to Canada (via the premium segment)," Grey added, "though we continue to see international opportunities as the primary growth drivers over the next few years - with supply constraints due to GAP/GMP requirements potentially presenting some bottlenecks to growth."

Cannabis stocks last week were mixed, with some stocks having risen after Amazon  (AMZN) - Get, Inc. Report backed a federal bill to legalize marijuana and said it would no longer screen for marijuana for any position not regulated by the Department of Transportation.

Last month, Aurora Cannabis  (ACB) - Get Aurora Cannabis Inc. Report missed Wall Street's third-quarter earnings expectations, prompting a number of analysts to cut their ratings and price targets.

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