Early on June 5, Cronos Group (CRON) moved higher. The stock rose almost 14% when the market opened. The company was moving higher due to analysts’ positive notes about the cannabis industry. The stock also received a rating upgrade.
Bank of America Merrill Lynch upgraded Cronos Group to a “buy” from its previous “underperform” rating. Usually, we see the upgrades going from “underperform” to “neutral” and then to a “buy.” Cronos Group skipped the “neutral” rating. The stock was also given a target price upgrade from 17 Canadian dollars to 27 Canadian dollars to be achieved over the next 12 months.
Cronos Group was trading at 22 Canadian dollars, which would leave an upside of ~22% in the next 12 months.
Bank of America
The optimism in the rating upgrade came from Cronos Group’s potential launch in the US. According to Bank of America, Cronos Group’s 2.4 billion Canadian dollar cash balance and Altria’s partnership will likely benefit the company in the future.
Bank of America estimated that the cannabis market will rise to $11.5 billion in 2032 from $2 billion currently. The increase would also mean favorable momentum for Cronos Group’s peers, which were largely in the green on June 5.