BOFA INITIATES CANNABIS STOCKS: In a Wednesday research note, BofA/Merrill analyst Christopher Carey initiated Aurora Cannabis (ACB) with a Buy and $11 price target saying it has a low cost production model, can protect margins in an oversupplied market and has the ability to serve a global market. Aurora also has long-time consumer investor Nelson Peltz as a Strategic Advisor which should accelerate partnership transactions, Carey said. In addition, the analyst initiated Cronos Group (CRON) with an Underperform and $13 price target saying he is not "comfortable" with valuation and screens the most expensive in his universe. Carey also initiated HEXO Corp (HEXO) with a Buy and $10 price target and naming it a "top pick in cannabis." The analyst said HEXO offers a compelling relative valuation, an innovation-forward organization, potential additional partnerships, and a de-risked cannabis supply. Additionally, Carey initiated Canopy Growth (CGC) with a Buy and $70 price target saying it is positioned to be a long-term leader in the global cannabis sector. The analyst said Canopy has scale with 6M square feet of cultivation capacity, capital following the Constellation (STZ) $4B investment, and vision as it lays groundwork to excel in areas higher on the value chain.
AURORA CANNABIS TO ACQUIRE REMAINING HEMPCO INTEREST: Aurora Cannabis and Hempco Food and Fiber announced Tuesday that the companies have entered into a binding letter agreement in regard to the basic terms and conditions upon which Aurora will acquire all of the issued and outstanding common shares of Hempco not already owned by Aurora. In consideration of the transaction, Aurora has agreed to pay $1.04 per Hempco Share, payable in common shares of Aurora, reflecting a valuation of approximately C$63.4M on a fully diluted basis. The parties expect to execute a Definitive Agreement on or before May 15.
VERTICAL SAYS SHORT TILRAY SHARES: Vertical Group analyst Gordon Johnson told investors in a Tuesday research note to use Aphria's (APHA) fiscal third quarter results as a guide and build a short position in Tilray (TLRY). The analyst previously initiated coverage of Tilray with a Sell rating and $8 year-end price target. Despite expectations for growth in Canadian sales due to the growth expectations for the recreational cannabis market, Aphria's kilograms sold fell 22.7% quarter-over-quarter in the quarter, Johnson said. The analyst maintains his negative bias on Tilray following Aphria's results.
APHRIA AGREES TO ACCELERATE EXPIRY OF GGB BID: Aphria announced Monday that it entered into a series of transactions that will accelerate the expiry date to April 25 for the takeover bid by Green Growth Brands and will terminate the arrangements with GA Opportunities for consideration of $89M. Aphria has entered into a shortened deposit period agreement with GGB to facilitate the acceleration of the expiry of GGB's offer. In that regard, Aphria has agreed to reduce the initial deposit period of the bid to 92 days from January 23, the date that GGB commenced the GGB offer.
CANOPY GROWTH ACQUIRES CAFINA: Canopy Growth announced Wednesday that it has completed an all-cash acquisition of Spain-based licensed cannabis producer Canamo y Fibras Naturales. The acquisition lays the foundation for Canopy Growth to expand its European production footprint and complement the company's existing 430,000 square foot licensed production site in Odense, Denmark, as well as its ISO 13485 internationally certified Storz and Bickel facility in Tutlingen, Germany. Cafina is one of three companies in Spain authorized to cultivate, distribute and export cannabis containing more than 0.2% of tetrahydrocannabinol for medicinal and research purposes.
OTHER CANNABIS STOCKS: Publicly-traded companies in the space include 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), Liberty Health Sciences (LHSIF), Origin House (ORHOF), Sunniva (SNNVF), Sproutly (SRUTF) and DionyMed Brands (HMDEF).
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