Piper Jaffray: Tilray, GW Pharma Are Early Leaders In Medical Cannabis

Cannabis stocks have been red-hot so far in 2019, and Piper Jaffray analyst Michael Lavery said Monday that the outlook for medical cannabis is brighter than ever.

Lavery recently met with a pain specialist to determine how much of an impact medical marijuana could have on the business of pain treatment, and the expert said the U.S. market is in dire need of a replacement for prescription opioids, the analyst said in a note. 

Medical Uses

Cannabis has a wide range of potential medical uses, including treatment of Parkinson’s disease, glaucoma, PTSD and cancer, Lavery said. 

Many patients prefer cannabis as an alternative to prescription medications simply to avoid the side effects of the drugs, the analyst said.. Researchers are still testing a range of potential applications for medical cannabis, including use as an appetite suppressant and sleep aid, he said. 

The medical expert Lavery met with said vapor is the safest and most effective way to deliver cannabis treatment, while tinctures are also effective, with a longer onset period. Ingestion is the least effective in terms of both onset time and patient experience, the analyst said. 

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Early Winners

While suffering patients are certainly interested in learning about the potential benefits of medical cannabis, investors care more about the potential financial impact marijuana could have.

Lavery said he expects cannabis to be federally legalized in the U.S. within the next few years, opening the floodgates for early market leaders.

The analyst recommends GW Pharmaceuticals PLC- ADR GWPH and its trailblazing cannabidiol drug Epidiolex, the first CBD product to be approved by the FDA.

Cannabis producer Tilray Inc TLRY is well-positioned to tap into the global medical cannabis market thanks to its partnership with drug giant Novartis AG NVS, Lavery said. 

“We believe its partnership can help educate and build trust with the medical community, helping to legitimize cannabis as a conventional medicine."

Piper Jaffray has an Overweight rating and $90 price target for Tilray and an Overweight rating and $185 target for GW Pharma.

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