Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Weed Stocks Burned as Cowen Paints Hazy Outlook

Published 24/02/2020, 20:31
Updated 24/02/2020, 20:49
© 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:ACB), Sundial Growers (NASDAQ:SNDL) and Tilray (NASDAQ:TLRY) 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:CGC) 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.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.