Fly News Breaks for October 11, 2019
Oct 11, 2019 | 08:29 EDT
As previously reported, 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.
News For HEXO From the Last 2 Days
Nov 14, 2019 | 15:50 EST
Shares of marijuana stocks are falling after another Canadian pot company reported quarterly results that disappointed investors. In its quarterly report, Canopy Growth (CGC), considered one of the leaders in the sector, reported net revenue of almost C$77M, 15% lower than the almost C$91M reported last quarter. CANNABIS DISAPPOINTMENT: In a report out earlier this week, Bill Kirk of MKM Partners said he sees today to be "book ended with cannabis disappointment." Kirk was referring to Thursday as a day that two significant marijuana companies report quarterly results. Canopy reported before the market open and is down significantly heading into the close. Aurora (ACB) results are expected after the bell tonight. The MKM analyst said in his note that he doesn't think either company will show meaningful top-line improvement due to inventory held leading to prices falling. Kirk added that "Aurora is unlikely to be EBITDA positive by June 2020 as consensus expects." Canopy Growth's CEO Mark Zekulin confirmed MKM's inventory concerns. "The last two quarters have been challenging for the Canadian cannabis sector as provinces have reduced purchases to lower inventory levels, retail store openings have fallen short of expectations, and Cannabis 2.0 products are yet to come to market." PRICE ACTION: Canopy Growth is trading 13.4% lower in afternoon trading to just over $16.00 per share. OTHER MARIJUANA RELATED STOCKS: Shares of other marijuana-related names are all lower in the final hour, including ETFMG Alternative Harvest (MJ), Tilray (TLRY), Aphria (APHA), Hexo (HEXO) Constellation Brands (STZ), and Scotts Miracle-Gro (SMG).