MedMen: Analysts’ Views before Its Earnings

MedMen (MMNFF) (MMEN) reported its fourth-quarter earnings on October 28. Since then, the stock has fallen 17.2%. MedMen will report its results for the first quarter of fiscal 2020 on November 26. We’ll discuss analysts’ target price and ratings for MedMen before its earnings.

What are analysts saying?

After MedMen reported its fourth-quarter earnings, Canaccord Genuity downgraded it to “hold” from “speculative buy.” The firm also reduced the target price to 2 Canadian dollars from 3.7 Canadian dollars.

Eight Capital also downgraded MedMen to “neutral” from “buy.” The firm reduced the target price to 2 Canadian dollars from 5 Canadian dollars, which represents an upside potential of 74% from its current trading price.

MedMen’s latest price update 

The number of analysts covering MedMen stock didn’t change from before the results. The stock’s consensus target price fell to 2.94 Canadian dollars from 5.43 Canadian dollars before its earnings—a fall of 45.8%. MedMen’s current revised target price means a potential upside of 155% over the next 12 months.

Aurora Cannabis (ACB) has a target price of 8.1 Canadian dollars, which is 65% higher than its current price. Aphria (APHA) has a target price of 12.9 Canadian dollars, which is 98% higher than its current price. Meanwhile, Cronos Group (CRON) has a target price of 15.8 Canadian dollars, which is 44% higher than its current trading price.

MedMen: Analysts’ Views before Its Earnings

MedMen’s stock performance

MedMen’s disappointing fourth-quarter results caused the stock price to fall. The company missed analysts’ revenue estimates for the quarter. To learn more about the company’s fourth-quarter results, read MedMen: Stock Falls over 20% after Q4 2019 Earnings. Before MedMen’s earnings announcement, the company mentioned that it terminated its “Business Combination Agreement” with PharmaCann. The stock fell after the announcement.

Also, investors and analysts’ negative sentiments impacted the cannabis sector last month. As a result, cannabis stocks fell. Many analysts also reduced the target price for MedMen and other cannabis stocks.

MedMen stock has fallen 59% year-to-date. The stock has fallen approximately 46% since it reported its preliminary fourth-quarter earnings on August 13. MedMen stock has fallen 29% in October. Meanwhile, Canopy Growth (CGC) (WEED) fell 13.2%, Aphria fell 3.6%, and Cronos Group fell 9.2% in October.

Tracking the trend

Over the past 12 months, MedMen stock has received increased coverage from analysts. The company’s revenue growth increased over the past 12 months.

MedMen expanded in US states where cannabis is legal. Recently, the company also launched a campaign in Florida called “Make It Legal Florida” to support marijuana legalization in the state. Notably, MedMen already has licenses to open 35 retail stores in Florida. On October 25, the company announced that it opened two stores in Florida. According to the company’s recent press release, along with the seven operational stores in Florida, it will open five more stores by the end of 2019.

The number of analysts covering the stock increased from six to eight over the last 12 months. However, analysts’ “buy” recommendations on the stock didn’t change. MedMen’s target price fell significantly during this period.

Analysts’ ratings

Along with the change in MedMen’s consensus target price after its earnings release, the consensus rating on the stock also changed. The overall majority rating for the stock is a “hold.”

Currently, out of the eight analysts covering the stock, none of the analysts have a “strong-buy.” One analyst recommends a “buy,” six recommend a “hold,” and one recommends a “sell.”

For Aurora Cannabis, seven analysts recommend a “hold.” Six analysts recommend a “buy” for Aphria. Meanwhile, Cronos Group has a “hold” recommendation from seven analysts.

To learn more about investing in marijuana stocks, read Cannabis Investment: How to Buy ACB, CGC, and Others.

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