Weed Stocks Burned as Cowen Paints Hazy Outlook

This post was originally published on this site
© Reuters. © Reuters.

By Yasin Ebrahim

Investing.com – Tilray led the freefall in marijuana stocks on Monday as one analyst on Wall Street warned that the upcoming further legalization of cannabis products in Canada, dubbed Cannabis 2.0, is unlikely to ease the current headwinds in the industry.

“We are downgrading Aurora Cannabis (NYSE:), Sundial Growers (NASDAQ:) and Tilray (NASDAQ:) to market perform, all from outperform, as we grow increasingly cautious on the outlook for cannabis in Canada,” Cowen said in a note.

Tilray fell about 10%, Canopy Growth (NYSE:) lost 6%, Aurora Cannabis fell 7%, but Sundial Growers bucked the trend, rising 4.5%.

The legalization of Cannabis 2.0 products in October last year, stoked investor hopes that an increase in cannabis-infused products available for sale would underpin sales and spark a turnaround in the industry.

Industry experts had estimated that sales of cannabis products such as edibles, beverages and vaping products were expected to account for $900 million of sales next year, according to Brightfield Group, a market research firm.

But those hopes were somewhat overly optimistic given the headwinds in the sector, including supply and cash difficulties that continue to keep a lid on growth, Cowen warned.

“Headwinds that have plagued the industry (pricing, stores, inventory) do not appear to be fading as anticipated, while 2.0 is likely not the elixir that the market was hoping for. Canopy Growth remains our only outperform rated stock among the Canadian LPs.”

Health Canada, the governing body overseeing and regulating cannabis sales, began accepting applications for the production of cannabis-derived products on Oct. 17. But under regulatory rules, the products were not allowed to hit the shelves for 60 days – until December – in order for inspections and approvals to be carried out.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Add Comment