AURORA CANNABIS APPOINTS PELTZ AS STRATEGIC ADVISOR: Aurora Cannabis (ACB) announced Wednesday that it has appointed activist investor Nelson Peltz as a strategic advisor. Peltz will "work collaboratively and strategically to explore potential partnerships that would be the optimal strategic fit for successful entry into each of Aurora's contemplated market segment," Aurora said in a statement. The company added that it has granted Peltz options to purchase 19.96M common Aurora shares at a price of C$10.34. Peltz, the chief executive officer and a founding partner of Trian Fund Management, said, “I believe Aurora has a solid execution track record, is strongly differentiated from its peers, has achieved integration throughout the value chain and is poised to go to the next level across a range of industry verticals." Following the news, GMP Securities analyst Martin Landry upgraded the stock to Buy from Hold and raised his price target to $15 from $9.50. Landry said Peltz could be "instrumental" in facilitating partnership talks with large consumer packaged goods companies. The company also announced Monday that it had commenced sales of cannabis oils to German pharmacies.
CANNABIS IN BEAUTY SEEN REACHING $25B: While monitoring cannabidiol as a theme in beauty, Jefferies analyst Stephanie Wissink noted Tuesday that while large conglomerates are infusing CBD into existing labels and could augment through M&A, indie brands and specialty retailers are the ones taking the lead in developing the category, estimated at $25B globally in 10 years. As with other ingredient trends, the analyst argued that CBD infused products will likely replace existing non-CBD items in the beauty bag and not significantly enlarge the market size. The analyst sees wellness aligned categories having among the best potential to capitalize on growth given generally loose regulatory frameworks around topicals, low cost digital content to market, and specialty venues to merchandise. As the trend develops, large conglomerates are infusing CBD into existing labels. she added, pointing out Estee Lauder's (EL) Origins Hemp Mask, Unilever's (UN) Murad Hemp Serum and L'Oreal's (LRLCY) Keihl's Cannabis Serum as examples, but the majority of CBD beauty offerings are from smaller indie brands.
NJ LAWMAKERS REACH AGREEMENT ON RECREATIONAL MARIJUANA: New Jersey lawmakers have agreed on legislation to legalize recreational marijuana for adults following over a year of negotiations, the Associated Press reported Tuesday. The deal calls for a $42 per ounce tax and enables towns to collect tax revenue, however it is unclear if there are enough votes in the Legislature to pass the bill.
JEFFERIES INITIATES TILRAY WITH UNDERPERFORM: On Friday, Jefferies analyst Owen Bennett initiated coverage of Tilray (TLRY) with an Underperform rating and $61 price target. Bennett's 10-year discounted cash flow-driven valuation suggests the stock is "too expensive for its outlook." As a company wanting to be a global leader, the names that Tilray needs to be compared to are Canopy Growth (CGC) and Aurora Cannabis, however Tilray's Canada medical share is not in the top four and recent consumer feedback is "not inspiring," the analyst said. Further, he believes the company's approach to recreational "does not appear as well thought through" and that its "optionality" in the U.S. is "less impressive."
ANALYST SAYS NARROW U.S. CANNABIS BILLS HAVE BEST PROSPECTS: Cowen analyst Jaret Seiberg said on Thursday it is hard for him to see a scenario in the 116th Congress in which Senate Majority Leader Mitch McConnell holds a vote on legislation to fully legalize cannabis, as too many senators see no political upside for McConnell to schedule such a vote. Given this view, Seiberg believes that prospects are better for narrower bills that could get attached to spending packages and other measures than for broader bills that would legalize recreational use. Of the narrower bills introduced in the U.S. so far, Seiberg believes the SAFE Act on cannabis banking has the best shot before the 2020 election.
OTHER CANNABIS STOCKS: Other publicly-traded companies in the space include Cronos Group (CRON), GW Pharma (GWPH), Aphria (APHA), CV Sciences (CVSI), CannTrust Holdings (CNTTF), General Cannabis (CANN), Innovative Industrial Properties (IIPR), India Globalization Capital (IGC), ICC International Cannabis (KNHBF), Biome Grow (ORTFD), MediPharm Labs (MLCPF), Indiva (NDVAF), OrganiGram (OGRMF), KushCo (KSHB), MedMen Enterprises (MMNFF), Elixinol Global (ELLXF), Planet 13 Holdings (PLNHF), Wayland Group (MRRCF), Khiron Life Sciences (KHRNF) and Liberty Health Sciences (LHSIF).
Keywords: cannabis, weed, stocks, marijuana, cultivation, legalization, CBD, THC, hemp