Analysts are hyping up marijuana stocks ahead of this week's Congressional vote on The Marijuana Opportunity Reinvestment and Expungement (MORE) Act of 2019.
Set for a vote by Congress between December 2-4, 2020, the MORE Act — sponsored by Vice President-elect Kamala Harris — decriminalizes marijuana at the federal level and allows the states to set their cannabis regulation policies.
The Analyst: Bank of America analysts Bryan Spillane and Lisa Lewandowski released an analyst note Monday focusing on Canopy Growth CGC.
They raised the price target on Canopy stock from CA$30 ($27.06) to CA$42 ($32.37) based upon ~19x CY21e EV/sales, and maintained ‘Buy’ rating on it.
They explained that potential changes to the US federal law on cannabis bode well for the overall cannabis sector, and especially for Canopy Growth as it would enable the Smiths Falls, Canada-based company to expand its activities in the U.S.
The Thesis: It is foreseeable for cannabis to become legal on a federal level, the analysts noted, citing President-elect Joe Biden's win and the five new states that have voted in favor of cannabis legalization.
Essentially, more Americans are becoming comfortable with weed.
“We see mgmt. changes, right-sizing of operations and its enviable cash and share position as all reasons to believe that Canopy can be a LT leader in the cannabis sector," the analysts noted.
Canopy recently inked a partnership with Martha Stewart.
As possible downside risks to the new price objective, Spillane and Lewandowski stressed the immature adult-use cannabis sector in Canada that could constrain sales progress, and financial circumstances post the pandemic, among others.
At the time of writing Canopy’s stock was down 4.41% at $27.72.
Benzinga’s Take: The MORE Act underscores how serious America is on ending marijuana prohibition. Whether
Other stocks to keep eye on include Sundial Growers Inc. SNDL trading 25% higher at $0.47 per share, India Globalization Capital IGC being up 11.84% at $2.125 per share, and HEXO Corp. HEXO up by 5.17% at $0.91 per share.
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Cannabis rescheduling seems to be right around the corner
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