Cannabis stock have heated up a bit to start the new year, but BofA Securities analyst Christopher Carey sees downside ahead.
BofA lowered its 2020 sales estimates across the board for Aurora Cannabis ACB, Canopy Growth Corp CGC, Organigram Holdings Inc. OGI, Cronos Group CRON, HEXO Corp. HEXO and Tilray Inc. TLRY.
"The reason for our estimate cuts is pretty simple," Carey wrote, "we now assume a roughly 25% lower market size for Canada’s adult use market in 2020, driven by fewer stores in Ontario; and, since our Canada adult use company estimates are anchored by market size and implied market share, our company sales estimates have thus come down."
Benzinga's Cannabis Capital Conference returns to Miami Feb. 24-25 with North America's largest B2B cannabis gathering, bringing together capital, cannabis executives, thought leaders and more!
According to the analyst’s calculations, Aphria Inc. APHA, Aurora, Tilray and Cronos need the most help from Ontario stores, while Hexo, Canopy Growth and Organigram are in better positions versus Street sales. Carey said both upside and downside visibility for Ontario stores is low.
BofA raised its price targets for Aphria from $5.36 to $6.13 (Neutral rating), Canopy Growth from $25.27 to $27 (Buy rating), Cronos from $9.19 to $9.89 (Buy rating) and Tilray from $18 to $22 (Neutral rating).
Carey said the firm boosted these price targets to mirror the expansion of multiples across cannabis: “Higher multiples raise the bar for all, adding risk to all names that we think need to be contemplated."
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
---|
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
Cannabis is evolving – don’t get left behind!
Curious about what’s next for the industry and how to leverage California’s unique market?
Join top executives, policymakers, and investors at the Benzinga Cannabis Market Spotlight in Anaheim, CA, at the House of Blues on November 12. Dive deep into the latest strategies, investment trends, and brand insights that are shaping the future of cannabis!
Get your tickets now to secure your spot and avoid last-minute price hikes.