Cannabis stocks were mostly lower on Tuesday, as investors' digested and downgraded by Canada's Cronos Group Inc. after its strong gains in the year so far.
were down 6%, after GMP Securities lowered its rating to buy from buy and reiterated a stock price target of C $ 24 ($ 18) that represents 21% downside from its current trading level.
"The company's shares have surged ~ 110% year-to-date on no material news and have outperformed the HMMJ cannabis index
by a factor of 2, "analyst Martin Landry wrote in the note. "This strong performance forces us to change our rating to HOLD solely based on valuation." GMP is a leader in the prominent outlook at Cronos, including its strong management team and record of efficient capital deployment. The recent news of tobacco giant Altria Inc.'s
planned C $ 2.4 billion investment in the company "will be a game changer," Landry wrote in a note.
However, "Cronos is still in the early stage of its development with limited revenues in relation to its sizable market cap, ”said Landry. “Hence, in our view, the company needs to backfill its valuation with capital deployment into the U.S. market, increase its penetration in the Canadian recreational market and continue its international expansion. ”
The analyst is advising investors to take a breather on the stock and wait for a more attractive entry point.
Also Tuesday, a new report on American's changing views of cannabis found public opinion has shifted dramatically in favor of legalization, a trend it partially credited to the media.
Read here: This is the reason why Americans have dramatically changed their views on legalizing pot
"As politically polarized as the country may seem, when it comes to marijuana, Americans have been changing their attitudes together , as a nation, ”the report published by research database The Conversation found.
Support for legalization began to climb as the media started to cover cannabis as a medical issue, disassociating it from other Schedule I drugs such as heroin and cocaine with which it is still classified. As Americans became more supportive of the substance, they became less punitive about its use and began to look at the criminal justice system as overly harsh.
overall support, the study found. It did not find a drastic increase in the number of users of cannabis in the U.S.
Namaste Technologies Inc.
shares rose 1%. The stock fell about 16% on Monday after it fired its chief executive for cause and launched a review of its strategic options that may result in a sale of the company.
and other breaches of fiduciary duty by Sean Dollinger and has launched legal action for damages and disgorgement.
The US Securities and Exchange Commission has a potentially elevated risk of scams and other suspicious behavior in the relatively nascent cannabis industry.
Tetra Bio-Pharma Inc.
shares slid 21%, after said it was temporarily suspending a phase 3 clinical program because of impurities it discovered in its PPP001 investigational drug, which is made of raw cannabis materials and is being given to patients. The company said it informed the regulators within 24 hours of discovering the impurities and has notified all patients involved.
It did not say who provided the cannabis, but the company has a distribution agreement with Aphria Inc. which has also conducted a financing deal with the biotech. An Aphria spokesperson was not immediately available to comment. Aphria shares
APHA, -6.78% APHA, -5.91%
were down 5.6%.
Read also: Don't miss: Aphria rises after Citron sells, MedMen sued by forms CFO
Elsewhere in the sector, Canopy Growth Corp. shares
were down 0.8%, and Tilray Inc.
Aurora Cannabis Inc.
ACB, [3.545%] gained 1%, Aleafia Health Inc.
ALEF, + 2.64%
ALEF, + 2.64%
was up 3.4% and Hexo Corp.
was down 0.6%.
The Horizons Marijuana Life Sciences ETF was up 0.6% and the ETFMG Alternative Harvest
as up 0.5%.
The S&P 500
SPX, + 0.06%
was up 0.4% and the Dow Jones Industrial Average
DJIA, + 0.31%
was up 0.6%.
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