Cannabis Watch: Canopy Growth leads marijuana stocks greater after GMP upgrades to buy

Cannabis Watch: Canopy Growth leads marijuana stocks greater after GMP upgrades to buy

By Blair Morris

September 23, 2019

Marijuana stocks were primarily greater on Monday, with Canopy Growth Corp. leading the gainers after 2 bullish analyst notes highlighting the benefits of a deal announced last week.

GMP expert Martin Landry upgraded Canopy.

CGC, 1.30%

WEED, 1.02%

to buy from hold, after the company recently purchased the rights to acquire U.S. multistate operator Acreage Holdings Inc. as soon as marijuana is legalized in the U.S. The stock soared 7.8%in afternoon trade.

” This transaction need to increase Acreage’s capability to combine the U.S. market,” Landry wrote in a note to customers. “For this reason, when Canopy officially takes ownership of Acreage, it might be much larger than currently.”

The offer gives Canopy a foothold in the U.S. market, which is approximated at about $10 billion, or 10 times bigger than Canada, which completely legislated cannabis last October, stated the note. Acreage is currently in 20 states with 87 dispensaries and 22 cultivation and processing websites.

Canopy is paying $3.4 billion, equivalent to a valuation multiple of 21.5 times agreement EBITDA for2020

See also: What a 30- day break from smoking cannabis does to your brain

” In our view, this takeout multiple is low offered the strategic nature of the acquisition and the potential for continued strong development as 2021 agreement estimates forecast Acreage’s EBITDA to fold 2020,” Landry composed. “Furthermore, appraisals of MSOs are likely to be greater upon legalization.”

The expert raised his stock rate target by $7 to $72, or about 21?ove its present trading level.

Separately, Criteria analyst Mike Hickey stated the offer “brightens a path for the U.S. cannabis market.” Criteria currently ranks Canopy a buy and has a C$100($75) price target, which is 63?ove the price of the Canadian-listed stock.

CannTrust shares.

CTST, 7.14%

TRST, 3.44%

fell 4.6?fore reversing those losses, after the company said it’s preparing a secondary offering of $200 countless its typical show the aim of financing cultivation and facility expansion, expanding outside growing, expanding globally and updating its extraction capacity. BofA Merrill Lynch, Citigroup, Credit Suisse and RBC Capital Markets are lead book-running supervisors for the offering, with Jefferies and Canaccord Genuity acting as co-managers.

Individually, the business offered assistance for the first quarter, based upon initial, unaudited outcomes. The company is expecting earnings of about C$17 million, up from C$ 7.8 million in the year-earlier period, driven by a 68%increase in medical clients and the first complete quarter of adult recreational use following legalization in Canada last October.

Earnings is anticipated to range from C$12 million to C$14 million, up from C$114 million. The company gathered about 9,424 kg of cannabis from its Niagara Center, up 96%from the fourth quarter. The typical earnings per dry gram rose 14%in the quarter.

The Green Organic Dutchman shares.

TGOD, -1.49%

TGOD, -1.49%

increased 4.7%. The company said Health Canada, the health ministry, has granted it an oil sales license for its Hamilton, Ontario center.

See: Greenlane IPO: 5 things to learn about the closest thing to a U.S. cannabis company to go public on Nasdaq

” This step will help TGOD in changing our superior quality organic raw material into a range of higher-margin marijuana items which is core to our company strategy, providing us with the opportunity to bring to market innovative and novel items, including drinks and edibles, once regulations allow,” the company stated in a declaration.

Canada will enable the sale of edibles from October 15 of this year.

In regulative news, lawmakers in Texas are set to dispute three cannabis reform expenses this week, according to Marijuana Minute, a website that works with activists, market agents and policy makers on patterns impacting marijuana. A Texas House committee recently authorized a bill that will broaden the state’s medical cannabis program to consist of more than a dozen health conditions that were not formerly covered.

The other bills cover decriminalization and hemp legalization.

Arkansas is expected to start sales of medical marijuana in less than a month, according to news site Cannabis Organisation Daily. The program has actually been slow to introduce because voters approved medical cannabis in2016

In other places in the sector, Cronos Group Inc.

CRON, 9.30%

CRON, 8.40%

was up 7.3%, Aurora Marijuana Inc.

ACB, 0.00%

ACB, 0.09%

was up 1.5%, and Tilray Inc.

TLRY, 7.44%

was up 4.4%.

Hexo Corp.

HEXO, -3.66%

was up 4.8%, GW Pharmaceuticals PLC.

GWPH, -2.43%

was up 3.4%, and Green Development Brands Inc. was up 7.3%.

Aphria Inc. stock.

APHA, 7.12%

APHA, 5.60%

was up 2.6%and Aleafia Health Inc.

ALEF, 2.34%

ALEF, 2.34%

was up 0.5%. OrganiGram Holdings Inc.

OGRMF, 5.21%

OGI, 6.08%

was up 1.7%.

Medical marijuana merchant MedMen Enterprises Inc. shares.

MMNFF, -0.15%

were down 5.5%, after the business’s Chief Operating Officer Ben Cook and General Counsel Lisa Sergi, who is likewise a board member, resigned. The company said it named Ryan Lissak as primary technology officer throughout its financial quarter ended March 30.

Read likewise: How living near a cannabis dispensary affects your house’s rate

MedMen is currently the subject of a lawsuit from its former finance head James Parker, declaring that he was exposed to racial, homophobic and misogynistic epithets and slurs, drug and alcohol abuse and individual humiliation, while at the business. The company has denied all misbehavior. In March, it was expelled from the New York Medical Marijuana Association over the claims.

Read: Tilray stock increases after the company reveals it can offer recreational pot


The Horizons Marijuana Life Sciences ETF.

HMMJ, 1.80%

was up 2.8%, and the ETFMG Option Harvest ETF.

MJ, 0.82%

was up 2.3%.

Meanwhile, the Dow Jones Industrial Average.

DJIA, 0.44%

was down 0.2%, while the S&P 500 index.

SPX, 0.37%

was flat.

See likewise: In California’s Weed Nation, wildfires burn both cash and crops

Cannabis Watch: All of MarketWatch’s protection of cannabis companies


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About Blair Morris