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Over the last few days, several analysts have changed their target price on major Canadian cannabis producers.

Here are their analyzes and their new target price

CANOPY GROWTH

Jefferies

Jefferies analyst Owen Bennett downgraded Canopy Growth (CGC) to Underperform from Hold with a price target of $18.80. Despite the recent selloff in shares, Canopy is the most expensive name across the cannabis space, Bennett told investors in a research note.

The analyst, who believes the company still has “material potential” long-term, says signs of share pressures in Canada, weak margin and profit performance in the near term, a lack of material catalysts, and “question marks over how successful beverages will be” warrant a downgrade to Underperform.

Jefferies analyst Ryan Tomkins downgraded Canopy Growth to Underperform from Hold with a C$25 price target.

Jaffray

Jaffray analyst Michael Lavery lowered his price target for Canopy Growth to $40 from $49 to reflect near-term risks from a slower retail rollout in Ontario and risks to vapor sales from recent headlines. The analyst, however, keeps an Overweight rating on the shares despite a reduced sales outlook.

He expects Canopy’s new management to bring a more disciplined approach to spending and capital allocation that should help the company to continue to grow without needing new capital. Further, the company’s capital position is a “key differentiator in the industry,” says Lavery. He believes the company is well positioned with $2.3B in cash and equivalents.

BofA Merrill Lynch

BofA Merrill Lynch analyst Christopher Carey downgraded Canopy Growth to Neutral from Buy and cut his price target on the New York traded shares to $27 from $46 as he cut his multiple in half to 10 times EV/sales. While he still sees Canopy as a long-term leader in the cannabis industry, he thinks Canada industry growth is set to pause in the second half and potentially flatten, which he thinks could also be the case with Canopy.

However, consensus is modeling strong quarter-over-quarter double-digit sales growth, noted Carey. The analyst, who sees too much risk to the stock until estimates are recalibrated, also thinks news about vaping could keep impacting cannabis sector sentiment in the near-term.

AURORA

CIBC

CIBC analyst John Zamparo started Aurora Cannabis with a Neutral rating and C$7 price target. The company’s Canadian market share leadership and early international success “provide encouragement,” but its lack of U.S. exposure, continued capital allocation towards cultivation, and a balance sheet “in need of support “limit optimism on the shares, Zamparo tells investors in a research note.

MKM Partners

MKM Partners analyst Bill Kirk initiated Aurora Cannabis with a Sell rating and C$5 price target, telling investors that he believes profitability for cultivators will generally get worse before getting better given that supply will continue to grow and pricing is already decreasing.

The analyst, who also sees the company’s outsized exposure to medical marijuana limiting its growth opportunity, believes Aurora will need to raise some capital before it is able to show positive EBITDA.

APHRIA

CIBC

CIBC analyst John Zamparo downgraded Aphria to Underperformer from Neutral and lowered his price target for the shares to $6.50 from $12. The stock closed Thursday down 23c to $5.84. The analyst cites concerns about “aggressive” Street estimates, potential asset impairment, a “leadership void and less robust supply contracts” for the downgrade.

While Aphria likely captures a high-single-digit market share, and last month’s partnership with PAX Era was a “meaningful win,” the stock carries more risk than reward at current levels, Zamparo tells investors in a research note.

The analyst believes consensus estimates need to come down to reflect slower industry growth than previously contemplated. He thinks this will pressure the stock.

HEXO

Roth Capital

Roth Capital analyst Scott Fortune downgraded Hexo to Neutral from Buy with a price target of $3.00, down from $10.00, after the company pre-announced weak Q4 revenue and withdrew its 2020 outlook.

Hexo, which Fortune contends “has always had a good pulse on the political and regulatory environment for cannabis in Canada,” called out the legal cannabis industry’s issues there and the analyst said legal access to the Canadian cannabis market remains materially underserved, which he does not see changing in the near-term.

As of May, Canada’s planned or operating retail locations are “about 90% short of matching the store density of a state such as Colorado,” Fortune added in his downgrade note.

Jefferies

Jefferies analyst Owen Bennett upgraded Hexo (HEXO) to Hold from Underperform with a price target of $2.90. The pressures facing the company are now better understood following its weaker than expected outlook, Bennett tells investors in a research note.

Jefferies analyst Ryan Tomkins upgraded Hexo to Hold from Underperform with a price target of C$3.80 following yesterday’s selloff in shares.

Oppenheimer

Oppenheimer analyst Rupesh Parikh tells investors to remain on the sidelines with respect to shares of Hexo after the company preannounced Q4 results meaningfully below expectations and withdrew its fiscal 2020 guidance for revenue of $400M.

The analyst, who “very much expected” revenue shortfalls given recent adverse industry developments, says commentary on weak sell-through is an incremental risk that he did not envision “this early in the ramp.” Parikh keeps a Perform rating on Hexo shares with a $2.75 price target.

BofA/Merrill

BofA/Merrill analyst Christopher Carey downgraded HEXO Corp to Underperform from Buy with a C$4 price target following the abrupt resignation of its “high-caliber” CFO,Michael Monahan, after only 4 months with the company.

The analyst thinks the corporate finance organization was less developed than Monahan had realized, and likely indicates there is much work ahead.

ORGANIGRAM

Jefferies

Jefferies analyst Owen Bennett upgraded Organigram Holdings to Buy from Hold with a price target of $6.20. The analyst cites valuation for the upgrade as he believes the recent selloff in the shares is overdone.

Jefferies analyst Ryan Tomkins upgraded Organigram Holdings to Buy from Hold with a price target of C$8.20

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This article is written and published by The Cannabis Stock

Disclaimer : The Cannabis Stock wants to promote the cannabis market with the best publication on the market. The Cannabis Stock does not recommend selling or buying any of the company mentioned and is not responsible for any losses that may result.

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