Hexo Corp.'s U.S.-listed shares HEXO, +1.77% HEXO, +3.03% slid 3% in premarket trade Tuesday, after MKM downgraded the Canadian cannabis company to neutral from buy after it was sued by Medipharm Labs Corp. LABS, -1.11% for breach of contract. "The hairy just got hairier," is how analyst Bill Kirk described the slate of problems facing the company. Since Hexo's chief financial officer resigned last October, the company missed on earnings and pulled guidance, it laid off employees and announced facility closures, it was found to have undisclosed illegal growing operations and it undertook dilutive equity raisings, Kirk wrote in a note to clients. The lawsuit is "the straw that has broken our back," he wrote. Court papers viewed by MarketWatch found it is being sued for the non-payment of C$9.8 million ($7.5 million) related to shipments of marijuana resin. Hexo sald Monday it intends to vigorously defend itself against the claims, without making any comment on quality or deliverables. "With a weak track record on accurately making positive predictions, it is difficult to handicap this latest issue," said the note. "Of 104 positive predictions made by HEXO over the last two years, just 3 of the 48 resolved were correct." Kirk cut his stock price target to C$1.50 from a prior C$5.00. Shares have fallen 75% in the last 12 months, while the ETFMG Alternative Harvest ETF MJ, -0.97% has fallen 50% and the S&P 500 SPX, -1.11% has gained 23%.