Analyst Retains ‘Buy’ Take on WeedMD Following Hiku Reversal

A new analyst report values the potential for a medically focussed cannabis producer after suffering a reversal in a potential merger.

Greg McLeish, analyst with Mackie Research Capital covering the cannabis space issued a new research data report stamping WeedMD (TSX:WMD) with a one-year price target of C$4 and retained his “Buy” rating.

McLeish highlighted the company’s current cash situation and said its funded capacity provides a strong asset.

“This strong cash position will also allow management to pursue strategic acquisitions and address potential working capital requirements,” McLeish wrote, according to Cantech Letter.

WeedMD was stuck in a business turnabout from Hiku Brands (CSE:HIKU), a company with which it held an arrangement to essentially merge both businesses.

As the deal continued to move forward, Canopy Growth (TSX:WEED; NYSE:CGC) entered the picture with an acquisition offer for Hiku.

“Ultimately, together we [Canopy and Hiku] will continue to build one of the world’s most engaging and successful cannabis retail and brand business,” Alan Gertner, CEO of Hiku said in a statement.

Thanks to the annulment from Hiku, WeedMD obtained a C$10 million termination fee, which the company highlighted as part of its cash position.

WeedMD’s stock declined immediately following the announcement from Canopy and Hiku, and continued with the company reaching a C$1.49 price point per share from its previous close on Tuesday (July 17).

Since the Hiku reversal on July 10, WMD has declined in price 27.32 percent.

McLeish’s new projection comes after endorsing the original merger with Hiku in a previous note.

Investor takeaway

Support from the financial community for WeedMD shows a strong foundation from the cannabis producer as it recovers and begins searching a potential new entry into the recreational cannabis space.

WeedMD will now have to deliver on its business strategy for investors to return to its side following the decline of the Hiku reversal.

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

Editorial Disclosure: Hiku Brands is a client of the Investing News Network. This article is not paid-for content.