CannTrust Holdings update
CannTrust Holdings (CTST), like its peers Canopy Growth (WEED) and HEXO (HEXO), has delivered a weak performance in June. All three companies have faced negative pressure following their earnings results as analysts’ ratings and price targets have been revised downward in the aftermath.
CannTrust’s price target has been revised downward in June to 11.99 Canadian dollars from the previous 12.6 Canadian dollars. At its peak, CannTrust’s price target hovered around 20 in February this year, which has now been cut nearly in half. Given such a significant downward revision in the company’s price target, we’re reminded of the risks that are associated with the cannabis industry.
The risks are particularly high due to the newness of the industry and the fact that predicting market demand with high accuracy is simply impossible. Thus, when analysts or the market overestimate growth for a company, its stock price can rise only to see a correction if it fails to meet those expectations.
On June 27, CannTrust closed at 6.6 Canadian dollars, indicating a potential upside of 83%.
While CTST’s price target has been lowered in June, analysts’ ratings for the stock have remained unchanged month-over-month. Of the 12 analysts tracking the stock, five have maintained “strong buys,” while seven have maintained “buys” in the current month. Consequently, the overall consensus rating for the company is a “buy.”
For a look at KushCo Holdings’ ratings and price target update, read KushCo Holdings: Analysts’ Ratings and Target Price in June.