Cannabis Coverage by Cowen: Cresco, Curaleaf, Acreage



Cannabis is in the spotlight right now. While legalization issues are heating up, cannabis players’ performance is also being highlighted.

Investors and analysts expected Aurora Cannabis (ACB) to outperform in its fourth quarter. However, the results disappointed and took a toll on ACB stock. Meanwhile, The Street reported that Cowen and Company analyst Vivien Azer initiated coverage on five cannabis stocks.

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Cowen bullish on cannabis

Despite the disappointing results by Aurora Cannabis, Cowen and Company is bullish on the sector. The five cannabis stocks that saw new coverage from Cowen are Cresco Labs (CRLBF), Green Thumb (GTBIF), Curaleaf (CURLF), MedMen (MMNFF) (MMEN), and Acreage Holdings (ACRGF).

Cowen’s ratings

Cowen gave an “outperform” rating to Cresco Labs with a price target of $14. It represents an upside potential of 73% from yesterday’s closing price. Cresco Labs reported solid Q2 2019 results, posting 253% YoY revenue growth and positive EBITDA of $14.5 million.

Curaleaf also received an “outperform” rating by Cowen with a price target of $10.50. This price target represents an upside potential of 41% from yesterday’s closing price.

Cowen rated Green Thumb as “outperform” with a price target of $18.50. This price target represents an upside potential of 96% from yesterday’s closing price.

MedMen received a “underperform” rating with a $1.50 price target, which represents a downside potential of 24% from yesterday’s closing price.

Cowen gave Acreage Holdings a “market perform” rating with a $9 price target. This represents an upside potential of 8% from yesterday’s closing price

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Aurora Cannabis results disappointed, but not all bad news

Aurora Cannabis missed its revenue guidance and analyst estimates. However, its net revenue increased 52% YoY. Aurora also missed generating positive EBITDA according to its guidance.

September started on a good note for cannabis stocks. However, ACB’s results took a toll on its stock and the sector. ACB fell 9.2% after its results. On Thursday, Canopy was down 3.1% while Curaleaf fell 6%. MedMen fell 2.9% while Acreage fell 3.6%. Plus, Cresco Labs fell 8.1% yesterday.

The cannabis sector becomes deeply affected when the significant players disappoint with their earnings. The industry’s performance primarily depends on the major Canadian players.

Last month, Canopy Growth (CGC) (WEED) also took down the sector with its results. CGC reported negative EBITDA of 92.06 million Canadian dollars in the first quarter of fiscal 2020. It also reported extensive losses of 0.30 Canadian dollars per share.

Other marijuana stock coverage by Cowen

Azer reduced the target price for Tilray from $150 to $60 last week due to the underdeveloped market in Canada. Azer said, “We would argue that TLRY has been the most impacted by weak industry supply as its asset-light model was initially overly reliant on third-party supply.”

Tilray’s revenue estimate looks positive for the third quarter. However, it could report a loss of $0.31 per share in the third quarter. It could also report a negative EBITDA of $17.5 million. To learn more about analysts’ views on Tilray, please read Tilray: Are Analysts Optimistic about Its Stock?

At 3:08 PM EDT, Canopy is up 2.9%, Tilray is up 2.4%, Curaleaf is up 1.7%, and Aurora is up 1.9%. Meanwhile, MedMen is down 5.2%, Cresco is down 2.3%, and Acreage is down 1.0%.

The cannabis industry in the spotlight

Cannabis legalization is a priority for cannabis players now. Regulating at a federal level would reduce illicit activities and black market sales. The Canadian cannabis companies can also expand their businesses in the US once cannabis becomes legalized at a federal level.

Although Canada plans to legalize edibles next month, the decision would be made at the state level. To learn more, please read Marijuana Legalization: ‘Make It Legal Florida!’


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