Cowen Analyst Raises Expectations for Cannabis Market

Cowen’s (NASDAQ:COWN) lead cannabis analyst raises projections for overall sector, adds sales from two Canadian firms will see a “material increase.”

In a new research note according to a report from CNBC, Vivien Azer, managing director and senior research analyst specializing in the beverage, tobacco, and cannabis sectors for Cowen, offered a bullish outlook for the cannabis space through 2019 and beyond.

Azer credits this positive sentiment thanks to the continued advancements in the American cannabis market and the continued growth of the Canadian one.

Cowen recommends Canadian firms Canopy Growth (NYSE:CGC,TSX:WEED) and Tilray (NASDAQ:TLRY), alongside ancillary company KushCo Holdings (OTCQB:KSHB).

Azer raised her previous projection of US$75 billion in US cannabis sales by 2030 to US$80 billion.

Despite the initial troubles from legalization in Canada, accompanied by results that have disappointed some observers and investors of the sector, Azer sees 2019 as a big year for Cowen’s Canadian licensed producer (LP) picks.

Through an e-commerce analysis, Azer indicated Canopy currently has an 18 percent leading position among all LPs for available products in the Canadian market.

“We remain confident in Canopy’s ability to generate such vibrant sequential growth based on the company’s seemingly leading share in the market,” she said in her note.

The analyst projects a revenue increase of C$239 million in fiscal 2019 to C$778 million in fiscal 2020.

When it comes to Tilray’s path Azer expects its new partnership with Sandoz, a subsidiary of Novartis (NYSE:NVS,SWX:NOVN) to help in its expansion plans for the international medical cannabis market.

“We continue to view the international medical market as one of the primary investment highlights for Tilray, which currently operates in 12 countries,” Azer wrote.

Both Tilray and Canopy have secured partnerships and investment deals with beverage makers as a way to seek the creation of cannabis infused drinks.

Azer also expressed support for the US cannabidiol market thanks to the passing of a new US$867 billion farm bill that legalizes hemp and its derivatives.

“We expect the category could generate $1.6 billion in revenues over the next year or two, depending on the timing of FDA commentary and the pace of retail acceptance,” Azer wrote.

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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.