On December 19, Cronos Group (CRON) was trading at 9.08 Canadian dollars, which implies a fall of 36.9% since the beginning of this year. Also, the company was trading at a discount of 72.4% from its 52-week high of 32.95 Canadian dollars, and a premium of 13.9% from its 52-week low of 7.97 Canadian dollars.
Along with the weakness in the cannabis sector, the company had reported lower-than-expected performance in the first three quarters of this year, which has dragged the company’s stock down. Meanwhile, its peers Aurora Cannabis (ACB), Canopy Growth (WEED), and Aphria (APHA) have fallen by 56.2%, 28.0%, and 17.5% year-to-date, respectively.
On the back of the decline in CRON’s stock price, let’s look at analysts’ recommendations for the stock.
A decline in analysts’ price targets for Cronos Group
From the above graph, we can see that analysts’ consensus price target has declined marginally from 12.88 Canadian dollars on November 19 to 12.63 Canadian dollars on December 19. The new price target represents a 12-month return potential of 39.1%.
However, there was a steep fall in analysts’ consensus estimates last month due to weak third-quarter performance. Following CRON’s third-quarter earnings, Cannacord Genuity, CIBC, Cormark Securities, and Cowen & Co. had all lowered their price targets. These price cuts had reduced analysts’ consensus price target from 15.70 Canadian dollars on October 19 to 12.88 Canadian dollars on November 19.
Analysts’ consensus price target has been falling since August due to weak second-quarter performance and weakness in the cannabis sector. The expectation of a slowdown in cannabis sales, vaping-related deaths, and higher-than-expected operating losses have been dragging the sector down.
Yesterday, Greg McLeish of Mackie Research Capital expressed concern about the cannabis sector due to a decline in sales and the dwindling cash position of many companies. As reported by Cantech Letter, McLeish considers the cannabis sector to be still in the initial stages of growth. So, he expects only market leaders to overcome initial challenges, which could lead to a consolidation in the sector.
No change in analysts’ ratings for Cronos Group
From the above graph, we can see that more analysts have started to cover CRON in the last 12 months. In December 2018, the company was covered by just five analysts compared to the current 12 analysts.
On December 19, 33.3% of the analysts rated the stock as a “buy,” 58.3% gave a “hold” rating, and the remaining 8.3% rated the stock as a “sell.” There have been no rating changes since last month. Now, let’s look at what analysts are recommending for Cronos Group’s peers.
- For Aurora Cannabis, nine of the 20 analysts gave the stock a “buy” rating. Of the remaining 11 analysts, eight rated it as a “hold,” and three analysts gave it a “sell” rating.
- Analysts favor a “buy” rating for Aphria. Ten of the 13 analysts that follow the stock rated the stock as a “buy.”
- Analysts favor a “hold” rating for Canopy Growth. Of the 22 analysts that follow the stock, 12 analysts rated the stock as a “hold.” For more, please read What Do Analysts Recommend for Canopy Growth?
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