Northland Downgrades Tilray After Huge Run

On Thursday, yet another analyst joined the growing chorus saying marijuana stock valuations are getting overheated. 

The Analyst

Northland Capital Markets analyst Mike Grondahl downgraded Tilray Inc TLRY from Outperform to Market Perform and removed its $60 price target.

The Thesis

Grondahl said he still loves Tilray as a company and believes it will be a central player in a global cannabis boom.

With the stock up 242.2 percent in the past month, he said additional upside is likely limited.

“With the recent (massive) move in the stock, we believe the risk-reward is far more balanced at this time,” the analyst said. 

Grondahl isn’t the only one to express skepticism about the recent rally. New Cannabis Ventures founding partner and 420 Investor author Alan Brochstein joined Benzinga's PreMarket Prep show Wednesday and said traders are running wild with Tilray, Canopy Growth Corp CGC and Cronos Group Inc CRON, the only three U.S.-listed cannabis stocks.

“There is a positive fundamental story going on, it’s just hard to tie the valuation into where we are right now,” Brochstein said.

Citron Research’s Andrew Left also told Benzinga on Thursday that companies like Tilray may soon take advantage of the opportunities that come along with an inflated share price and choose to raise capital via a secondary offering.

“They are taking advantage of a market that is giving them a premium that obviously they believe is unwarranted,” Left said. 

Price Action

Tilray pared some of its recent gains on Thursday morning and was trading lower by nearly 11 percent at $80 at the time of publication. 

Related Links:

Even Marijuana Bulls Are Becoming Skeptical Of US-Listed Cannabis Stock Prices

Cannabis Stocks Remain Hot, But Might Be Getting Overheated