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Cannabis stocks tumbled on Monday, after Jefferies & Co. jumped into the sector with the introductions of nine pot producers and named Aurora Cannabis Inc. and Canopy Growth Corp. the cream of the cannabis crop.
Overall, Jefferies awarded the purchase to five companies: Aurora
CBA + 4.74%
CBA + 4.92%
, CannTrust Holdings Inc.
CTST, -8.58%
TRST, -6.50%
, Organigram Holdings Inc.
OGI + 1.16%
, Green Organic Dutchman Holdings Ltd.
tgod, + 3.79%
TGODF, + 3.53%
and Flowr Corp.
FLWPF, + 3.88%
. Two companies got a detention note – Canopy
GSC -1.53%
CANNABIS, -1.21%
and Emerald Health Therapeutics Inc.
THS + 0.26%
– while Cronos Group Inc.
CRON, -7.62%
CRON, -7.32%
and Hexo Corp.
hexo, -3.73%
hexo, -3.48%
have been labeled "underperformance", the equivalent of a sales note.
Bennett wrote that Aurora, which had received a price target of $ 12, and Canopy, initiated with a target of $ 64, are "best placed to dominate globally for years to come." The market valuation "has correctly captured this strong positioning", but he sees a growth margin for Aurora. He particularly appreciates the fact that the company has positioned itself to enter the US market, which it believes is "still unappreciated" by the market.
See also: Canopy Growth Co-CEO Reveals Top Priorities of World's Largest Legal Marijuana Company
"The United States is the largest cannabis market in the world," writes Bennett in an article on the entire industry, noting that cannabis is still illegal at the federal level and that all pot companies can do is to position oneself in an American way. "If all cannabis co. wants to claim the future status of large capitalization or even megapap, they must have a strong position in the United States.
Cronos shares recorded the biggest rise in the pack on Monday, down more than 7%. Owen Bennett, an analyst at Jefferies, wrote that he was "not very impressed" by the company's first results in the Canadian market for recreational marijuana sales.
"The flower capacity could be limiting, its main brand of recreational products has a dubious target audience in our opinion, the first consumer reviews of the said brand do not stand out and little infrastructure seem to be in place for the market derivatives, even with Altria
MO + 0.66%
support, "writes Bennett while giving Cronos a $ 17 price goal. Bennett said Cronos is well positioned in the marijuana market for medical purposes, especially overseas.
Bennett has been tougher on Hexo and has signed a deal with Molson Coors Brewing Co.
TAP, -1.44%
.
"We believe that the market tends, because of the limited number of financial metrics / industry data, to consider any GIC / brand partnership as a validation of superior activity. the contract signed between Hexo and Molson is an example, "wrote Bennett. "In fact, Molson has not invested capital, so we do not know if Hexo will have patented superior water-soluble applications to market in the short term, no current bottling infrastructure appears to be in place." place and we have no idea of their ability to extract the drinks. "
Read: How can marijuana companies profit without selling pot
The CannTrust rating came as pots producer shares began trading Tuesday morning on the New York Stock Exchange under the symbol CTST
CTST, -8.58%
. Bennett said the "listing" could result in an attractive 12-month revaluation as more large investors get acquainted with the story. "
Medical cannabis company GW Pharmaceuticals Holdings PLC
GWPH, -0.52%
should release its quarterly results Tuesday. MedMen Inc. will be declared later this week.
MMNFF, + 3.40%
and Green Growth Brands Inc.
GGBXF, -2.47%
, who makes a hostile bid on Aphria Inc.
APHA -4.81%
APHA -4.36%
.
Overall, the sector was down on Monday, with Life Sciences Marijuana Horizons
HMMJ, -0.89%
down by 0.9% and ETFMG Alternative Harvest ETF
MJ -1.12%
down 1.1%.
Correction: In an earlier version of this article, the income calculation date for GW Pharmaceuticals PLC was inaccurate due to an error by a third party data provider. The article has been updated.
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