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If you own shares of Curaleaf (CURLF) stock, we have good news and bad news for you. The good news: As of 2:55 p.m. EDT, Curaleaf stock is down "only" 5%. The bad news: Earlier today, it was down as much as 14%, so if you sold there, you sold at the bottom. What went wrong with the stock? In a word: FDA.
Earlier today, the FDA issued a warning letter to Curaleaf for illegally selling unapproved products containing cannabidiol (CBD) online with unsubstantiated claims that the products treat cancer, Alzheimer’s disease, opioid withdrawal, pain and pet anxiety, among other conditions or diseases. Curaleaf must respond within 15 business days and notify the Agency how it will correct these violations.
The question racing through the Street: Is now the time to run for the hills, or should you take advantage of share weakness?
Seaport analyst Brett Hundley views the FDA letter as a "non-event" for the company and believes the stock sell-off is premature. The analyst reiterates a Buy rating on Curaleaf stock, with a price target of $11.00, which implies nearly 50% upside from current levels. (To watch Hundley's track record, click here)
Hundley commented, "We view any weakness in CURLF shares as near-term buying opportunities for investors. Our view is shared across many other names in the North American cannabis space, today. For numerous months now, the space has been plagued by selling pressure related to retail investor relocation...to regulatory disappointment...to profitability delays...to renewed questions over credibility. For those willing to look forward, we see a number of positive catalysts on the horizon."
"The tone at today's Senate subcommittee hearing on banking reform was very positive, in our view; any forward movement by Congress could open the space up to more pronounced involvement of the institutional investor community, helping valuations greatly. The FDA is under immense pressure to get CBD regulations into place, and there is potential for guidelines to come to market by this fall, according to the agency. We see potential for agent risk to be improved in coming months, as more management positions change over to experienced individuals," the analyst added.
Hundley is certainly not the first analyst with a bullish outlook for the medical marijuana provider, as TipRanks analytics showcasing Curaleaf stock as a Strong Buy. With an average price target of $15, analysts clearly think the stock could double in the next 12 months. (See Curaleaf's price targets and analyst ratings on TipRanks)