AbrahamST wrote: Desjardins recommend ACB and HEXO , HEXO is Flying.
09:46 AM EDT, 04/26/2019 (MT Newswires) -- Though industry sales numbers have been "somewhat underwhelming" following the first months since the legalization of adult-use cannabis in Canada, Desjardins Securities analyst John Chu said "the hype remains strong and for good reason as investors start looking at the market opportunity from a global perspective -- which is huge -- rather than simply a Canadian one," the Globe & Mail reported.
In a research report released Friday, Chu initiated coverage of Aurora Cannabis (ACB.TO), Canopy Growth (WEED.TO) and HEXO (HEXO.TO), emphasizing the potential stemming from an investing perspective that stretches beyond the Canadian border, pointing to the interest of major consumer packaged goods (CPG) companies and U.S. retailers, while also acknowledging the valuation difficulties investors are grappling with.
Believing it stands out with the most upside potential and a "cheap" current valuation, Chu initiated coverage of Gatineau, Que.-based HEXO with a buy rating and $14 target. The average target on the Street is currently $10.29, according to Thomson Reuters Eikon data.
"Despite its smaller size (capacity and market cap), HEXO joined the elite ranks quickly with the single largest supply deal with any province (Quebec) as well as its Molson Coors Canada JV, and is one of only a handful of companies with supply agreements with seven or more provinces in Canada," he said. "HEXO, with its track record for award-winning products and recognition for innovative products, should be a force to be reckoned with in the recreational segment."
Believing it is "emerging as the gold standard in the industry," Chu also gave Aurora Cannabis a buy rating with a $16.50 target, which exceeds the current consensus target of $13.91.