|Bid||21.06 x 0|
|Ask||21.07 x 0|
|Day's Range||20.87 - 21.60|
|52 Week Range||7.33 - 32.95|
|Beta (3Y Monthly)||5.06|
|PE Ratio (TTM)||37.81|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||15.23|
Cronos Group Inc. (CRON.TO) (CRON.TO) (“Cronos Group” or the “Company”) reports that at its Annual Meeting of Shareholders on June 19, 2019 there were 610 shareholders voting in person or by proxy holding in total 261,290,314 common shares, representing 78.2% of the total number of common shares outstanding.
The energy drink space may have a lesson for the budding cannabis industry, Bank of America Merrill Lynch says. While there was all kinds of buzz around energy drinks when Red Bull came along in 1997, ...
The sentiment towards the cannabis sector weakened further last week, as major industry players ended in the negative territory. HEXO (HEXO), which released disappointing earnings on June 12, was one of the key reasons for the extension of the weakness in the sector last week.
If you have doubts that cannabis is on its way from illegal to industrial, take a look inside Cresco Labs’ custom built, 43-thousand square-foot production facility in Joliet, Illinois.
At first glance, cannabis and cryptocurrencies seem to have a lot in common. Both comprise highly speculative markets subject to exuberant highs and crushing lows. The legality and regulation of each has languished in the gray. And to many mainstream investors, both have failed to shake synonymy with the black market.
The cannabis industry has grown in recent months and years, and many companies in the cannabis and health-related industries have been uplisted to reputable U.S. exchanges. Learn about the marijuana stocks on the Nasdaq.
Cronos Group (CRON) soared 11% Wednesday on news that a Wall Street analyst double upgraded the cannabis stock. The bullish call is puzzling considering the already stretched valuation of the Canadian company.Big Call Reversal Analyst Christopher Carey from BofA/ML upgraded the stock from Underperform to Buy. In the process, the analyst raised the price target from $17 to $27.The stock had dipped into the $13s prior to this call so logically the analyst needed to look at upgrading Cronos to Neutral based on the previous target of $17. Instead, the analyst made the bold call to raise the price target by an incredible $10 or nearly 60%. The new $27 target equated to a roughly 100% gain from the starting price on the previous day.Such a large price hike on a stock that had declined by over $10 from the highs above $25 early this year is rather odd. The weak Q1 results of Cronos and fellow Canadian stocks like Tilray (TLRY) had originally made investors question the bullish thesis on these two stocks.Problematic Call At least until this problematic call by BofA/ML. Cronos already had a stock valuation approaching $5.0 billion before this move. The company only reported Q1 sales of C$6.5 million or roughly $4.8 million.The valuation already had a massive mismatch requiring substantial growth by Cronos to justify. The problematic part of the call is the need to raise the target price so dramatically to a market valuation of ~$7.7 billion.Part of the call was related to the theory that Cronos will be able to accelerate a move into the U.S. by leveraging Altira’s (MO) distribution network of 230,000 retail locations. With the FDA still banning CBD in food and dietary products and general questions about safety from the regulatory body hosting a public hearing last Friday, vast expansion into the U.S. isn’t guaranteed.Bank of American projects that the U.S. CBD market surges from somewhere around $2.0 billion today to $11.5 billion by 2032. The problem for Cronos Group is that so many U.S. companies have already established market positions and distribution in local retail stores. No guarantee exists that the Altria distribution network will randomly want the CBD products from Cronos.Analyst revenue estimates are only in the $250 million range for 2020. Again, the thesis that the Canadian cannabis stocks listed on U.S. stock exchanges are the most overvalued stocks in the sector are reinforced by this mismatch following this analyst call.Outside of the $1.8 billion investment from Altria Group, Cronos Group doesn’t have a lot to show the market. The company only sold 1,111 kilograms of cannabis during the March quarter leaving it far behind the market leaders despite the valuation target that approaches one the largest valuations in the sector.TakeawayThe key investor takeaway is that Cronos Group has the cash to make a big splash in the cannabis sector, but the company so far hasn’t provided investors with much to actually support the current market valuation. The stock didn’t warrant an upgrade making this call so problematic for investors in the sector still being misled to investor in the Canadian operators just because they are listed on the major stock exchanges.To read more on the nitty gritty of what’s going on in the rising cannabis industry, click here. Read more on CRON: * Why Cronos’ Entry Into U.S. CBD Market Could Be Overrated Over the Long Term * Bank of America Flips Over Cronos Stock * Top Analyst Says Buy Canopy Growth Stock, Hold Your Horses on Cronos * Don’t Hold the Bag on Cronos (CRON) Stock More recent articles from Smarter Analyst: * Should Investors Buy Facebook (FB) Stock After Its Cryptocurrency Launch? Top Analyst Weighs In * Avoid Canopy Growth Stock Like the Plague; Here’s Why * Hexo: When the Bulls Aren’t Bullish Enough * Market Delays Can Derail Aurora Cannabis (ACB) Stock
Bank of America sees 39% upside in this marijuana stock, but a lot would need to go right for that to happen.
Jefferies analyst Owen Bennett likes Aphria and the Green Organic Dutchman, but is less impressed by Cronos Group. Where the marijuana market is going, and how to play it.
Cronos Group (CRON) got a nice boost from its upgrade from Underperform to Buy from Bank of America/Merrill Lynch analyst Christopher Carey, who also boosted his price target on the company from $13.00 to $20.00 per share.The impetus behind upgrading the stock by two levels were comments by Cronos CEO Mike Gorenstein, who stated that the company was going to get aggressive with its launch of CBD in the U.S. He was very clear he meant by aggressive that it wasn't going to be “that long of a way out.”Partnership with AltriaCarey suggested in a research note that the partnership between Cronos and Altria Group Inc., which has a 45 percent stake in Cronos, was the “key to winning the U.S.”Carey doesn't think Cronos will use its C$2.4 billion cash to make an acquisition, rather he sees Cronos leveraging the distribution network of Altria - which has a presence in about 230,000 stores - launching its products in those locations.He said the "potential to scale distribution nationally via Altria separates Cronos vs peers.”I don't have problems with what Carey concludes in general, but there is the fact that even if Cronos were to "win" the U.S. CBD market as it stands today, it represents only about $2 billion at this time. Taking into account the rapidly growing number of competitors in the space, even if it eventually gains decent share in the segment, it doesn't represent in my view, something that will be a major gamechanger in near term.The only way it could is if the company does get extremely aggressive with the cooperation of Altria, and takes an enormous amount of market share because of the huge number of potential outlets it could sell out of. The other problem is how much inventory does it really have on hand to make this a significant catalyst anytime soon? Even with its cash hoard, you can't buy time with it in the sense of producing products faster, unless they invest in more facilities or enter into more partnerships to boost production rates.Also, the U.S. CBD market is projected to grow to about $20 billion by 2022. That's not bad, but the number of major players fighting for share will only increase during that time.I'm not saying this isn't going to give Cronos a nice boost, only that it needs to be tempered with the realities of doing business. If the company is able to leverage Altria's distribution network, it will need a lot of product to fill up the huge number of outlets available to it.The long termAs noted about, the size of the U.S. CBD market through 2022 is only projected to be at about $20 billion by 2022. That may seem like a lot, but when measuring it against the fast-growing medical cannabis market, it's very small. There's also the consistency associated with the medical cannabis market that is predictable over the long term. The CBD market is a relative unknown at this time, and can only be guessed at as to the growth potential.Another uncertainty surrounding CBD is the current limitations it has in the U.S. concerning food additives, which is illegal for interstate commerce. That's why the company is looking primarily at vape cartridges, sprays, tinctures and CBD creams to start with. How those breaks down on the demand side is probably fairly small.Even now the company still carries a high valuation against its peers, and it seems to me it'll not only have to generate more revenue once it goes after the U.S. CBD market, but a lot more revenue to justify its high valuation.One of the issues there as I see it is the market has attributed a lot more value to companies that have been given a cash infusion, such as Cronos and Canopy Growth, even though the companies have had to give up a big part of their businesses in return. It remains to be seen whether or not having a lot of cash available where the cannabis market is at this time, is a positive for Cronos.To me much of the positive is already priced in, which we're seeing in the probable access to Altria's distribution network. I say probable because it has yet to be confirmed that that is in fact the direction the company takes.The next important thing, assuming it distributes through Altria, is how it deploys its cash going forward. That will be as important as the short-term bump Cronos gets from the current positive sentiment.Once there is visibility concerning how Cronos is going to execute its aggressive strategy, there will almost certainly be another nice upward move in its share price, whether that finds a higher bottom or not will be determined by how the market views the long-term viability of its strategy.ConclusionNow that expectations have risen for Cronos Group, I do have concerns that once it launches it strategy, it could be disappointing because of the limited number of CBD products it will offer for sale. How much of the vape cartridges, sprays, tinctures and CBD creams market it'll grab is uncertain, and of course how large it is, and how quickly it gain share.While I agree the near-term bear thesis that had been in play has in general changed, but I'm not yet convinced it's to the degree Carey thinks it is.Even so, there will probably be a higher bottom for now until the details of the strategy are revealed, and further out, what the actual sales numbers end up being. For now, nothing has really changed other than management has said it's going to get aggressive in its assault on the U.S. CBD market.The assumptions are its access to Altria's giant distribution network and its large cash holdings will combine to make this a significant catalyst. The questions remain concerning how big the market really is, how long it'll take to roll out the products, and how the FDA treats CBD that is infused in food and drinks.Until then, I'm going to hold off being overly optimistic, and maybe look for short-term positions in the stock that will surely be profitable from news that triggers upward moves in its share price.Longer term, there's too much uncertainty surrounding CBD in the U.S. to make a reasonable judgment on the size of the market. Once things are cleared up, then we'll see the potential of the overall market if it includes being able to sell across state lines.To read more on the nitty gritty of what’s going on in the rising cannabis industry, click here. Read more on CRON: * Bank of America Flips Over Cronos Stock * Top Analyst Says Buy Canopy Growth Stock, Hold Your Horses on Cronos * Don’t Hold the Bag on Cronos (CRON) Stock * Cronos (CRON) Stock Still Looks Overvalued More recent articles from Smarter Analyst: * Should Investors Buy Facebook (FB) Stock After Its Cryptocurrency Launch? Top Analyst Weighs In * Avoid Canopy Growth Stock Like the Plague; Here’s Why * Hexo: When the Bulls Aren’t Bullish Enough * Market Delays Can Derail Aurora Cannabis (ACB) Stock
After following the cannabis industry for a couple years, Stifel analyst Andrew Carter launched formal coverage this week of Canada’s large-cap producers. He thinks that Aurora, Tilray, and Cronos Group only merit Hold ratings.
Canopy Growth stock is the pot industry's "best investable opportunity," Stifel analysts said, even as they remained cautious on other marijuana stocks.
Cronos (CRON) shareholders enjoyed a quick, one-day, near-11% surge in share price Wednesday, and they didn't have earnings to thank for it this time. In fact, Cronos's May 9 earnings announcement actually only led to a 9% gain in the stock.Instead, they had Bank of America (BofA).On Wednesday, BofA's Christopher Carey published what he called a "double-upgrade" of Cronos shares, flipping all the way from "underperform" to "buy" in an instant, with a new target price of $20, which implies nearly 30% upside from current levels. (To watch Carey's track record, click here)The analyst explained its move by referencing "a group lunch hosted by CAGNY (Consumer Analyst Group of New York) on June 4th in NYC in which CEO Mike Gorenstein noted that Cronos will be 'aggressive' and 'we are not talking that long of a way out' regarding a US CBD launch."This promise from Cronos management, combined with a belief that Cronos's alliance with tobacco giant Altria will give Cronos an advantage as the U.S. market opens up to marijuana, provide the primary foundations for Carey's decision to entirely reverse his opinion of Cronos stock.Cronos sells both dried marijuana flower and also cannabis oil, the latter of which is growing by leaps and bounds -- enough so that CBD "oil" sales that accounted for 9% of Cronos's sales a year ago had grown into 23% of the business by Q1 2019. And yes, Carey believes that CBD is "big" for Cronos. The analyst estimates that CBD oil sales of $2 billion annually, currently, will grow to $11.5 billion by 2032.Specifically, the analyst cites Americans' "high propensity [to spend a lot of money on] wellness products," which CBD is marketing itself as being one of. If only 1% of Americans eventually spend at least $50 a month on CBD products for "wellness," Carey believes U.S. CBD sales could eventually tip the scales at the aforementioned $11.5 billion figure.So far, so good. But in the analyst's view, it's Cronos's alliance with Altria -- which owns about 45% of Cronos stock -- that will be the real game-changer for the cannabis company.Here's why:Altria boasts a "presence" in 230,000 U.S. stores, says Carey, primarily convenience stores (which the analyst shorthands as "C-stores"). As marijuana is gradually legalized in the U.S., the analyst expects Cronos products to appear in most or all of these locations, piggybacking upon Altria's distribution network. This would, after all, be to Altria's benefit given its sizeable stake in Cronos's success.In the analyst's view, Cronos is most likely to try to leverage Altria's distribution channels to develop cannabis-infused beverages, both hot and cold, and also "vapes" -- CBD oil that can be heated for inhalation in a vaporizer -- and perhaps even to develop the vaporizer devices themselves. Indeed, in that regard, Cronos announced in its last earnings release the establishment of a "Cronos Device Labs" R&D center at which it plans "to develop next-generation vaporizer products that are designed specifically for cannabinoid applications."If all goes according to plan, Carey estimates that Cronos, which sold less than $12 million worth of product last year, could be doing as much as $246 million in annual sales (C$330 million) by 2021. Cronos would still only be barely profitable at that level, granted. But then again, weak-to-nil profits have never scared investors away from buying marijuana stocks before. Why should they start now?To read more on the nitty gritty of what’s going on in the rising cannabis industry, click here. Read more on CRON: * Why Cronos’ Entry Into U.S. CBD Market Could Be Overrated Over the Long Term * Top Analyst Says Buy Canopy Growth Stock, Hold Your Horses on Cronos * Don’t Hold the Bag on Cronos (CRON) Stock * Cronos (CRON) Stock Still Looks Overvalued More recent articles from Smarter Analyst: * Should Investors Buy Facebook (FB) Stock After Its Cryptocurrency Launch? Top Analyst Weighs In * Avoid Canopy Growth Stock Like the Plague; Here’s Why * Hexo: When the Bulls Aren’t Bullish Enough * Market Delays Can Derail Aurora Cannabis (ACB) Stock
Just how high can CBD sales climb? That's the key question facing companies and regulators as cannabis goes mainstream.
Investors have had an appetite for cannabis stocks since recreational marijuana was legalized in Canada last year. On Thursday, Stifel analyst W. Andrew Carter initiated coverage of Cronos with a Hold rating and C$18 ($13.44 USD) price target. Need more cannabis news?
Cronos scored a double upgrade from Bank of America. Yahoo Finance's Myles Udland, Akiko Fujita and Dan Roberts discuss the call.