Shares of multi-faceted brand owner and integrator Upexi Inc (US:UPXI) are up around 10% over the last few days following the announcement of two acquisitions in as many days.
Despite the rally, Upexi continues to trade below its $5 initial public offering price from mid-2021 but has rallied several times toward $6 per share in its first two years as a listed company.
In the first transaction, the Clearwater, Florida company acquired the remaining 45% interest in Cygnet Online, an Amazon and e-commerce seller with 1,200 active SKUs of branded over-the-counter products. The deal was done a year ahead of schedule.
The second acquisition was of a Texas-based wellness and nutrition brand that specializes in the growing superfoods category.
Upexi’s CEO Allan Marshall said that the acquisitions fall squarely in line with the company’s strategy to acquire founder-owned and operated, high margin and profitable brands.
Established Seller
With sales topping $29.5 million in calendar 2022, Cygnet is a well-established reseller market seller on Amazon (US:AMZN) with licenses to sell many branded OTC products. The acquisition will give UPXI full ownership of Cygnet’s expanding business and secure the company’s Amazon reseller business expansion strategy for the future.
The synergies with Upexi are expected to increase both the number of products and total sales in the future. The deal closes the week of May 15 with structured cash payments equaling $1.95 million over the subsequent 12 months.
Upexi signed a letter of intent to buy all of the assets and working capital of the Texus wellness business which generated $15 million in sales for the previous 12 months. The transaction will cost UPXI $2.5 million in the form of cash, stock and an earn-out combination.
The acquisitions come at a time when current market turmoil is presenting favorable opportunities for acquisitions and opportunities for Upexi’s short- and long-term business growth. The company remains focused on maintaining its current growth trajectory through 2024 and beyond.
CEO Purchases
In the lead up to the transactions, CEO Marshall purchased shares in three transactions during March in the trading window after February’s second quarter results.
This was Marshall’s first purchase so far in 2023, occurring from March 15-17 at prices ranging from $4.33 through to $4.48 per share on average. In total, he bought 13,0001 shares at an average purchase price of $4.41 per share.
Marshall now owns a total of 2,588,082 shares after the transactions, equating to around 14.4% ownership of the float.
UPXI stock’s Fintels Insider Sentiment Score of 85.71 is bullish on the company from the perspective of increased buying activity relative to 14,958 other globally screened securities. The score ranks UPXI in the top 2% out of all stocks analyzed.
Analyst’s View
For the second fiscal quarter (December), Upexi reported a 144% increase in sales year-on-year to $23.1 million.
The group reported positive adjusted EBITDA of $0.12 million, swinging from a negative figure of $1.3 million in the prior year’s quarter.
On the bottom line, the company swung from a $0.3 million net loss in 2021 to a positive net profit of $2.7 million equating to earnings per share of 15 cents for investors.
EF Hutton analyst Michael Albanese highlighted in a report after the results that the company is on track to meet its $100 million sales goal for the year and is well-positioned to work through its pipeline of potential transactions.
The firm maintained its ‘buy’ call and a $7 target price following the results.
Fintel’s consensus target price of $7.14 suggests analysts think the stock could rise 72% over the next year.
This article originally appeared on Fintel
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