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Aurora Cannabis (ACB) and Cover growth (CGC) are the two most predisposed marijuana stocks in the world, said a Jefferies analyst on Monday in a massive 250-plus-page report and a series of research notes initiating coverage for different cannabis-producing companies.
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But he asked when the Altria (MO) investment in a cannabis producer Cronos Group (CRON) could begin to bear fruit for the tobacco giant.
This cover makes Jefferies the last Wall Street company to follow the cannabis industry.
At the same time, Cowen & Co. released a 106-page report on the marijuana industry. Cowen said nearly 7% of US adults use CBD, or cannabidiol, as a supplement, according to a survey of about 2,500 adults. The percentage was much higher than expected by analysts. Cowen estimated that the US CBD market could generate sales of $ 16 billion by 2025. Marijuana stocks were mixed on Monday.
U.S. Key For Pot Producers
Owen Bennett, an analyst at Jefferies, said that long-term winners will provide both medical and recreational grass and will have considerable influence in the United States. The US market is the largest pot market in the world, even though marijuana is illegal at the federal level.
"Although not all cover names are currently allowed for US operations while this is illegal at the federal level," he said, "they should still be optional when / if Americans change. "
The success in the marijuana sector for recreational purposes will essentially depend on "the creation of brands and the provision of differentiating experiences," he said. The medical, meanwhile, will depend on unique and precise drug formulations, he said.
He estimated that the global cannabis industry could account for between $ 50 billion and $ 130 billion over the next 10 years. It has also started to cover six other cannabis producing companies: Hexo, the Green Organic Dutchman, CannTrust (CTST), OrganiGram, Emerald and Flowr.
Cover Growth: Doing All Right
Bennett said Canopy Growth "did everything possible" to become a world leader in cannabis. But he initiated Canopy Growth's actions with a sustaining note. He argued that the valuation of Canopy Growth shares largely reflected the company's position globally.
Canopy Growth shares fell 1.9% on the stock market today. Stocks fell last week after one analyst said the company may not have enough marijuana to maintain its grip on the Canadian market.
Bennett called the $ 3.8 billion investment from the beer and wine maker Constellation Brands (STZ) a "significant advantage". And he praised the company's international presence, medical research resources, and patents.
Bennett also stated that Canopy Growth would benefit from its leisure brand, Tweed, citing the stores that the company has in place named Tweed.
He also spoke about the company's training program for Tweed's executioners. Budtenders, the staff who help customers make purchasing decisions, often play an important role in choosing products by another type of product.
Canopy also has a license to produce hemp, a great source of CBD, in the state of New York. But he added that lack of clarity in regulation could prevent gains from materializing.
"Although the CBD space in the United States may be an additional catalyst, we have trouble seeing them over a 12-month period, with the need to make FDA decisions," he said. -he declares.
Aurora Cannabis Stocks' Less Popular & # 39;
The Aurora cannabis stock, Bennett said, was less popular than Canopy. He started coverage of the Aurora cannabis stock with a purchase rating.
The company, he said, has the second largest production capacity behind Canopy. He added that the ambitious acquisition campaign of Aurora – MedReleaf and others – would bear fruit in the coming years.
Similar to Canopy, Bennett said the company's medical and recreational activities were strong. But he said the prospects for the Aurora in the United States were "extremely" underestimated. He argued that Aurora's potential exposure to the United States came from investments or partnerships with HempCo and Evio Beauty.
The Aurora cannabis stock rose 0.9% on Monday. The Aurora cannabis stock has a rating of 92 out of 99. This is the highest score for Canadian marijuana stocks traded on US stock exchanges.
The Cronos group "ahead of itself"
Bennett began hedging the Cronos Group's shares at a lower yield. Cronos Group shares fell 5.1% on Monday.
He said the market "has moved ahead" after tobacco giant Altria agreed to take a massive stake in Cronos in December.
"In another Cannabis GIC investment, Constellation has already provided manufacturing advice to Canopy," Bennett wrote. "It does not seem that the same thing can be said (for the moment) of Altria (although in its defense, the agreement was only concluded in December), which means that the short-term benefits of operational support may be limited. "
Other analysts cite the popularity of vaping in both tobacco and marijuana as an advantage of the Altria-Cronos deal. But Bennett said that nicotine vapor was "fundamentally different" from cannabis.
He also noted that Cronos "seems to be late" compared to his rivals in medical research. Bennett also said that Cronos' leading brand of recreational products "has a dubious target audience in our opinion, the first consumer reviews of the brand do not stand out and that there appears to be little infrastructure in place for the derivatives market." , even with the support of Altria ".
Other marijuana stocks
Of the other marijuana stocks, Tilray (TLRY) dipped by 1.35%. Aphria (APHA) slipped 4.2%.
CannTrust, which began trading on the New York Stock Exchange Monday, opened at 9.91 but fell to 9.28 during the day.
Not just a commodity?
Bennett also dismissed the argument that cannabis was only another product in bulk. He argued that there are more than 1,000 varieties of cannabis capable of providing a wide range of experiments.
"What's important here is that if you are able to provide a consistently high quality experience, and differentiated from other producers, you will be able to charge a premium," he said. he declares.
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