16 Sep

Cronos Group: Target Price and Valuation Update

WRITTEN BY Margaret Patrick

A total of 12 analysts have been covering Cronos Group (CRON) (CRON) in August and September. In contrast, 13 analysts covered the stock in July. The consensus target price for the stock fell to 19.88 Canadian dollars from 20.3 Canadian dollars in August, which represents a fall of ~2.07%. The company closed at 15.30 Canadian dollars on September 13. Notably, the company’s current revised target price means a potential upside of ~29.93% over the next 12 months.

What are analysts saying about Cronos Group?

Cronos Growth released its strong second-quarter earnings on August 8, which prompted several analysts to increase their recommendations. On August 9, Canaccord Genuity upgraded its rating from “sell” to “hold.” Piper Jaffray initiated coverage on the stock with an “overweight” rating on August 13. On September 5, BMO Capital Markets upgraded the stock from “underperform” to “market perform.” To learn more about the company’s second-quarter results, read Cronos Group Rises on Impressive Q2 Sales.

Jim Cramer, CNBC’s Mad Money host, has been recommending Cronos Group for several months now. He rates Cronos Group and Aphria ahead of Canopy Growth. Read Why Does Jim Cramer Like Cronos Group and Aphria? to learn more.

On September 3, Cowen reduced the company’s target price from 21 Canadian dollars to 17 Canadian dollars. The financial services firm cited concerns about Cronos Group’s scale and overall strategy to profitability. The reduction caused the company’s share price to close at $14.63 on September 4—2.79% lower than the previous close.

Cronos Group: Target Price and Valuation Update

Tracking the trend

Over the past 12-month period, the stock has received increased coverage from analysts. The number of analysts covering the stock increased from five in October 2018 to 12 in September. The price target also increased from 10.9 Canadian dollars in October 2018 to 22.78 Canadian dollars in April. Since May, the target price has been fluctuating in the range of 19.5 Canadian dollars–20.5 Canadian dollars.

Cronos Group’s share price movements

Cronos Group’s shares have been subject to a few setbacks since its second-quarter earnings. Currently, the stock has fallen 0.65% on the Toronto stock exchange on a YTD (year-to-date) basis.

On August 13, Tilray (TLRY) reported its second-quarter results. While the company beat the consensus revenue estimate by $5.66 million, it missed the consensus earnings estimate by $0.05. In the second-quarter earnings call, Tilray reported a YoY decline in the average selling price per gram of cannabis. The fall was around 28% from $6.38 in the first quarter to $4.61 in the second quarter. The lower average selling pushed down Tilray’s share prices and other cannabis players including Cronos Group, Aurora Cannabis, and Canopy Growth. To know more about Tilray’s second-quarter performance, read Tilray Stock Fell More than 10% after Its Q2 Earnings.

Cronos Group’s shares fell 3.75% to $17.70 on the Toronto stock exchange on August 14. Canopy Growth’s dismal first-quarter earnings made the downward pressure on Cronos Group stock worse. Cronos Group fell by an additional 8.87% to $16.13 on August 15. To learn how Canopy Growth’s earnings impacted other cannabis stocks, read Canopy Growth Earnings Impacted the Cannabis Sector.

Analysts’ ratings

Cronos Group’s consensus target price has fallen in September. Analysts gave the company a consensus “hold” rating. One analyst maintained a “strong buy” rating, while two gave a “buy” rating—up from one before its latest earnings release.

Eight analysts have “hold” rating on the stock—up from seven before the company’s earnings release. One analyst maintained a “strong sell” on the stock—down from two before its latest earnings release.

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