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Cronos Group Receives Rare ‘Buy’ Rating from MKM Partners

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Cronos Group (NASDAQ:CRON) announced that it would report its results for the fourth quarter of 2019 on February 27. However, on February 24, the company announced that the results would be delayed. The company cited a delay in the completion of its financial statements. Notably, the delay in the company’s earnings and weakness in the cannabis sector could have dragged the stock down. As of Tuesday, Cronos Group was trading at 7.01 Canadian dollars—a fall of 29.7% since the beginning of this year.

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However, on Wednesday, MKM Partners upgraded the stock from “neutral” to “buy.” As reported by Seeking Alpha, MKM Partners analyst Bill Kirk likes Cronos Group’s healthy cash position, strong track record, and its relationship with Altria (NYSE:MO). However, MKM Partners lowered its target price for the stock from 12 Canadian dollars to 11 Canadian dollars, which represents a return potential of 38.4% from its closing price on Wednesday. MKM Partners’ upgrade caused Cronos Group’s stock price to rise to a high of 8.02 Canadian dollars on Wednesday before closing at 7.95 Canadian dollars—a rise of 12% from the previous day’s closing price.

Not all of the analysts are bullish on Cronos Group

Although MKM Partners upgraded Cronos Group, not all of the analysts are bullish on the stock. On Tuesday, Stifel downgraded the stock from “buy” to “hold” and lowered its target price from 12 Canadian dollars to 8 Canadian dollars. As reported by The Fly, Andrew Carter of Stifel stated that the company’s inability to complete its SEC filings and the investigation of its revenue recognition practices created uncertainty. In his research note, Carter said that given the investigation and the lack of an SEC filing, it’s difficult to project the outlook for Cronos Group stock.

Wall Street prefers a “hold” rating for Cronos Group. Among the 13 analysts, seven recommend a “hold,” five recommend a “buy,” and one recommends a “sell.” Overall, analysts have given a 12-month target price of 11.46 Canadian dollars. The target price implies a 12-month return potential of 44.2%.

Let’s look at analysts’ recommendations for Cronos Group’s peers:

  • For Canopy Growth (CGC:NYSE)(TSE:WEED), analysts prefer a “hold” rating. Among the 21 analysts, 12 recommend a “hold.” Overall, analysts have given the stock a 12-month target price of 32.27 Canadian dollars, which represents a return potential of 35.8%.
  • Among the 15 analysts that follow Aphria (NYSE:APHA), 11 recommend a “buy” rating. Overall, analysts have given a 12-month target price of 11.71 Canadian dollars with a 12-month return potential of 142.4%.
  • Wall Street prefers a “hold” rating for Aurora Cannabis. Among the 20 analysts, 14 recommend a “hold” rating. As of Wednesday, analysts’ consensus target price is 2.42 Canadian dollars with a return potential of 29.9%. Read Why Did Cowen Downgrade Aurora Cannabis? to learn more.
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