Piper Jaffray Rates CRON ‘Overweight’ and ACB ‘Neutral’

Piper Jaffray has rated Cronos Group (CRON) as “overweight.” The investment company has given Cronos Group a 12-month price target of $18, which indicates a potential upside of 35.8% from its August 12 closing price of $13.25.

Cronos Group reported its second-quarter earnings results on August 8. The company outperformed analysts’ revenue expectations by 38%. Following the company’s second-quarter earnings results, PI Financial and Canaccord Genuity both upgraded its stock. PI Financial hiked its rating to a “buy” from a “neutral,” while Canaccord raised its rating to a “hold.”

Of the 12 analysts that follow Cronos, 58% call it a “hold,” 25% call it a “buy,” and 16.7% call it a “sell.” On average, analysts give it a 12-month price target of 20.30 Canadian dollars with return potential of 16.1%.

Piper Jaffray gives Aurora a “neutral” rating

Today, Piper Jaffray initiated its coverage on Aurora Cannabis (ACB) with a “neutral” rating and a price target of $7.0. Piper’s price target represents a potential upside of 6% from its current price of $6.59.

Aurora possesses industry-leading capacity and a higher gross margin than its peers. The company is on track to report positive EBITDA in its fourth quarter. However, according to Michael Lavery of Piper Jaffray, Aurora’s balance sheet and the progress it’s made in penetrating the marijuana markets in Canada, the US, and Europe don’t justify its premium valuation.

Overall, analysts favor a “buy” rating on Aurora, with 64.3% of the 14 analysts that follow the stock rating it “buy,” while remaining 35.7% have rated the stock as “hold.” On average, analysts have given the stock a 12-month price target of 13.54 Canadian dollars. On August 12, the company was trading at a discount of 55.7% to analysts’ average price target.

Stock performance

Today, Cronos Group was up 4.6% at 1:15 PM ET, while Aurora Cannabis was trading flat. This year, both Cronos and Aurora are outperforming the broader equity market. Year-to-date, Cronos was up 27.5% as of August 12, while Aurora was up 32.9%. On August 6, Aurora’s management provided guidance for its fourth quarter, which was better than analysts’ expectations. The optimistic outlook led Aurora stock to rise last week. This year, the Horizons Marijuana Life Sciences Index ETF (HMMJ) and the S&P 500 Index have risen 17.2% and 15.0%, respectively.

Today, Tilray is scheduled to report its second-quarter earnings results after the market closes. Read our earnings preview in Could Tilray’s Q2 Results Boost Its Stock Price?