Cannabis Roundup: HEXO, WEED, ACB, and CTST


Nov. 20 2020, Updated 3:17 p.m. ET

On October 14, CNBC reported that China wishes to have another round of talks before signing the first phase of the trade deal between the US and China. The broader US markets were relatively flat today. However, weakness in the cannabis sector continued.

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Cannabis stocks’ performances

The sector ETF, the ETFMG Alternative Harvest ETF (MJ), was down 0.4% as of 2:00 PM ET. Most cannabis stocks were also trading in the red.

HEXO falls over 5%

Today, Seaport Global downgraded HEXO (HEO) from “buy” to “neutral,” according to MarketWatch. Earlier, on October 11, Eight Capital downgraded the stock from “buy” to “neutral.” Seaport Global’s downgrade appears to have led the company’s stock price to fall. Today, at 2:00 PM ET, the company was trading 5.5% lower than its previous day’s closing price. As of October 11, the company had lost 35.9% of its stock value this month. The abrupt resignation of its CFO, its double downgrade by Bank of America Merrill Lynch, and its lower-than-expected preliminary fourth-quarter revenue appear to have led to the fall in the company’s stock price.

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CGC was down over 3.0%

Today, Seaport Global also downgraded Canopy Growth (CGC) (WEED) from “buy” to “neutral,” according to MarketWatch. Seaport Global’s downgrade appears to have led to a fall in the company’s stock. At 2:00 PM ET, it was down 3.1% from its previous day’s closing price. On September 27, Bank of America downgraded the stock from “buy” to “neutral. This month, several analysts have lowered their price targets on the stock. All these factors have led it to fall 15.4% in October.

Aurora Cannabis continues to trade in the red

Seaport Global has maintained its “neutral” rating on Aurora Cannabis (ACB), according to MarketWatch. However, Barron’s reported that MKM Partners’ Bill Kirk lowered his 12-month price target from 5.0 Canadian dollars to 3.5 Canadian dollars. As reported by the article, Kirk cited pricing pressures, an increase in the pricing gap between legal and illegal cannabis, and a slower rate of new store openings for the price cut. The investment company has also lowered its estimate for the company’s fiscal 2020 sales. At 2:00 PM ET, Aurora was down 3.1%.

CTST rises over 19%

As of yesterday, CannTrust Holdings (CTST) (TRST) had lost 81.0% of its stock value year-to-date. Its violation of some regulations led Health Canada to suspend its licenses under the Cannabis Act. The suspension of CannTrust’s licenses led the company’s stock to fall.

However, today, the company announced that it would destroy 12 million Canadian dollars’ worth of cannabis plants and 65 million Canadian dollars’ worth of inventory to advance its commitment toward full regulatory compliance. Investors are hoping that these measures will lead to the reinstatement of CannTrusts’s licenses. Investor optimism led the stock’s price to rise 19.8% today as of 2:02 PM ET.

For more marijuana-related news and updates, be sure to check out 420 Investor Daily.


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