Taglich Brothers Maintains Speculative Buy Rating On Cosmos Health With $4 Price Target, Highlighting Potential Valuation Upside

Cosmos Health COSM is a global healthcare group that remains significantly undervalued by the market, despite strong execution and broad diversification across multiple sectors. The company boasts an innovative R&D division that leverages AI-driven drug repurposing, along with ownership of proprietary pharmaceutical and nutraceutical brands like Sky Premium Life.

As a vertically integrated manufacturer of medicines, Cosmos is strategically positioned within the healthcare industry. Additionally, its logistics arm, CosmoFarm, distributes healthcare products to over 1,000 pharmacies, while its telehealth platform further strengthens the company's presence in the evolving healthcare landscape.

Despite the company generating nearly $60 million in annual revenue—expected to grow to $155.80 million by 2027, according to the company's guidance for the 2024-2027 period—its market cap remains depressed at just around $20 million. The share price has dropped significantly over the past couple of years, despite notable progress on multiple fronts. Based on the guidance provided issued by the company, it expects to be highly profitable in the coming years, with EBITDA projected to reach nearly $30 million by 2027.

Specifically, the company issued the following guidance:

($)	2024	2025	2026	2027
Revenue	59,349,546	80,670,924	125,124,323	155,802,733
Gross profit	6,251,422	16,208,325	32,120,201	47,061,142
Gross profit margin (%)	10.50%	20.10%	25.70%	30.20%
Income / (loss) from operations	-6,376,828	2,881,375	15,280,227	26,629,633
Income / (loss) before income taxes	-6,761,998	2,290,791	14,815,306	26,209,497
Net income / (loss)	-6,761,998	1,786,817	11,555,939	20,443,407
Adjusted EBITDA	-1,205,344	6,269,028	19,604,785	29,397,406
Adjusted EBITDA margin (%)	-2.00%	7.80%	15.70%	18.90%
YoY Revenue Growth	11.20%	35.90%	55.10%	24.50%
YoY Gross Profit Growth	43.70%	159.30%	98.20%	46.50%
YoY Net Income Growth	63.50%	126.40%	546.70%	76.90%
YoY Adj EBITDA Growth	-99.80%	620.10%	212.70%	50.00%

The anticipated achievements are expected to result from a combination of strategic initiatives, including a focus on higher-margin business segments, operational synergies, and enhanced cost efficiency. As highlighted by the company, the following key priorities could drive this growth:

• Expansion of Sky Premium Life’s global footprint and product range, introducing new formulas, therapeutic areas, and customized offerings. This will be supported by strategic partnerships with exclusive distributors and digital channels. 
• Global launch of C-Sept and C-Scrub, both of which possess significant market potential and face limited competition. Production is being scaled up, with additional products in the development pipeline.
• Expansion of generic pharmaceuticals across the EU and international markets, with a focus on advanced generics and innovative OTC products. 
• Optimization of Contract Manufacturing Organization (CMO) operations, prioritizing high-demand medicines and competitive pricing strategies.
• Progress toward World Medical Organization (WMO) patent approval and completion of clinical trials for the CCX obesity pill by 2025, with commercialization anticipated in 2026.
• Driving organic growth by integrating the pharmacy distribution network to enhance efficiency and scalability.
• Corporate reorganization efforts, focusing on cost-cutting initiatives and optimizing asset and resource utilization through the integration of business units.

These initiatives aim to propel the company forward while delivering sustained profitability and operational growth.

Sharing the company's optimistic outlook, Taglich Brothers recently published an updated research report on the company’s common stock. Taglich maintains a Speculative Buy rating with a $4 price target, implying a nearly four-fold increase in the share price over the next 12 months.

Taglich estimates that the company's valuation should improve alongside revenue growth, which is expected to translate into operating profits and positive cash flow. Currently, Cosmos’s price-to-sales multiple (0.3x) significantly trails the sector average of 2.4x for comparable companies in medical distribution and drug manufacturing, indicating a potential catch-up opportunity. Moving forward, investors are likely to assign a valuation multiple closer to industry norms. Even with a conservative approach, applying a lower-than-average price-to-sales multiple of 1.4x to the 2025 sales per share forecast of $3.86 supports the $4 price target, accounting for execution risks and potential warrant dilution.

Recently, the company has rapidly secured distribution agreements for its proprietary Sky Premium Life brand across the GCC—including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates—as well as in European markets like Slovakia, Hungary, Poland, and Czechia. It has even signed exclusivity agreements to distribute real-time mpox (formerly monkeypox) PCR tests as far as India. 

In summary, Cosmos Health is a company worth monitoring as it works to position itself for potential alignment with industry peers.

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