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Cannabis Weekly Round-Up: CIBC Updates Targets for Key Stocks
Aug. 21, 2020 10:10AM PST
Cannabis Investing News
This week in cannabis, bank analysts offered updated guidance on a selection of Canadian cannabis producers.
Three Canadian cannabis producers have received updated ratings from big bank analysts.
Earnings reports also continued to roll in this week as marijuana companies with operations in the US market delivered quarterly updates to investors.
Keep reading to find out more cannabis highlights from this week.
Aphria boosted by CIBC analysts
This past week, researchers at Canadian bank CIBC issued a new investor note in which they upgraded Aphria (NASDAQ:APHA,TSX:APHA) to the “outperformer” category.
The analysts praised the company for its increased market share of Canadian cannabis sales, its decision to scrap a $40 million investment in the Latin America cannabis market and its potential to generate positive operating cash flow in upcoming quarters.
“Aphria should be able to survive regardless of the pace of evolution in Canada’s cannabis market, and a US market entry would represent a potentially material catalyst,” said the analysts as part of their investment thesis for the company.
The company has a base-case price target from the researchers of C$7.50; CIBC’s report also includes an upside scenario of C$11 and a downside scenario of C$4.
In the same note CIBC, downgraded its price targets for Aurora Cannabis (NYSE:ACB,TSX:ACB) and HEXO (NASDAQ:HEXO,TSX:HEXO) to C$20 and C$0.90, respectively.
“Our volume and market share assumptions are mostly unchanged, but we believe pricing, particularly in the value segment, where each company has captured a meaningful following among consumers, will continue to see compression over the coming year,” the note indicates.
Financial results grab investor attention
TerrAscend (CSE:TER,OTCQX:TRSSF) and Curaleaf Holdings (CSE:CURA,OTCQX:CURLF) joined the collection of companies issuing quarterly reports, with both providing solid revenue growth.
Curaleaf reported sequential total revenue growth of 22 percent, resulting in quarterly revenue of US$117.5 million. It now has operations across 17 states with favorable cannabis laws.
“The outstanding results come despite headwinds related to temporary COVID-19 related closures and restrictions in Massachusetts and Nevada,” Joseph Lusardi, CEO of the multi-state operator, said.
Meanwhile, TerrAscend said sales in the US market accounted for a significant portion of its overall final sales line for the quarter. In Q2, the firm reported net sales of C$47.2 million.
“After achieving our first quarter of positive (earnings before interest, taxes, depreciation and amortization) EBITDA in Q1, we have now achieved another significant milestone of positive cashflow from operations in Q2,” Jason Ackerman, CEO and executive chairman of TerrAscend, told investors.
Cannabis company news
- Neptune Wellness Solutions (NASDAQ:NEPT,TSX:NEPT) made official the upcoming launch of its new consumer brand, dubbed Mood Ring. According to the company, this brand is designed to satisfy consumer demand for quality, environmentally friendly products at an affordable price point. The brand is set to launch in the fall in Canada and will offer both CBD and THC products.
- Planet 13 Holdings (CSE:PLTH,OTCQB:PLNHF) told investors this past week it is upsizing its already confirmed public offering. The deal, co-led by Beacon Securities and Canaccord Genuity, will now see the purchase of 5.4 million units of the company at a set price of C$3.70, resulting in gross proceeds of just over C$20 million.
- Avicanna (TSX:AVCN,OTCQX:AVCNF) issued its official Q2 financial report in which it touts a quarterly revenue uptick of 172 percent for a resulting C$709,468. While Avicanna reported a net loss for the quarter of C$7.6 million, the company indicated it has made strides to reduce “general and administrative costs.”
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
