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Curaleaf is buying private, midwest-focused multi-state operator GR companies Inc aka Grassroots for $875 million dollars in a cash and stock deal. Yahoo Finance's Zack Guzman & Sibile Marcellus, along with Dealbreaker Executive Editor Thornton McEnery discuss with Curaleaf CEO Joe Lusardi
Aurora Cannabis shares tumble Thursday to pull the overall sector lower, after an analyst at Bank of America Merrill Lynch downgraded the stock on concerns about its rate of spending cash.
Shares of Anheuser-Busch InBev S.A. rose 1.2% in midday trading Thursday, after The Wall Street Journal reported that the Budweiser, Stella Artois and Corona beer brewer was exploring a sale of assets as it looks to reduce debt after calling off the initial public offering of its Asia-based business. Citing people familiar with the matter, the WSJ report said A-B InBev is considering selling assets in South Korea, Australia and Central America. In May, private-equity firm KKR & Co. had approached A-B InBev about buying back some of the Asia-based assets, the WSJ report said, as KKR had previously bought the Korean business and sold it back to A-B InBev for $5.8 billion in 2014. A-B InBev's stock has rallied 36% year to date, while the S&P 500 has gained 19%.
Nine months after "legalization" rolled out across Canada, Miami-based investment banker Ladenburg Thalmann finally got around to initiating coverage of the Canadian cannabis industry. Beginning with just four major marijuana stocks, Ladenburg naturally focused on the biggest and best-known... which is why it's so curious to see that they managed to commit a faux pas right at the start!We are speaking of course of Ladenburg's initiation report on Canopy Growth (CGC). Valued at $12.7 billion, Canopy is far and away the largest Canadian cannabis company by market capitalization. It's a natural target for an analyst just starting out covering the industry. And yet, no sooner had he set out along the path to covering cannabis, than, Ladenburg analyst Glenn G. Mattson stepped into a pothole. The analyst posits a $50 target price for Canopy Growth stock, and rates it a "buy."Sketching out the investment case for Canopy, Mattson began by describing the market opportunity here ("a potential $150 billion industry"). He then proceeded to describe how Canopy Growth is beginning to attack this market, and "on pace to reach a CDN $1 billion annual run rate in revenue by 4Q:F20 (March) mainly as a result of an aggressive pursuit of the Canadian market opportunity."All of which sounds fine... until you remember that just last week, analysts at Jefferies sat down with new Canopy Growth CFO Mike Lee, and reported that at that meeting Canopy tried "to distance themselves from the CAD 1bn sales run rate by Q4 this year they have previously communicated."We guess that tells you when Mattson began drafting its report on Canopy Growth. Clearly, it was some time before last Thursday...Fortunately, things improved after that rocky start. Mattson correctly noted that in addition to being the biggest and most aggressive player in this market already, Canopy also "has the most aggressive approach to capturing the U.S. market," specifically, by making a contingent offer to acquire U.S.-based Acreage Holdings, "one of the largest multi-state operators in the U.S."Between its own production and Acreage's, Mattson argues that if and when legalization is enacted in the U.S., Canopy will immediately be able to deploy "significant scale" to capture market share south of the Canadian border.Mattson also points out how Canopy is cleverly leveraging the (already legal) status of hemp production in the U.S. to set up "a New York based hemp facility for the production of CBD," along with "plans to build facilities in 5-7 more states in F2020." Once cannabis is legalized alongside hemp, he notes, "those facilities could be put to a higher purpose" -- i.e. growing and processing more profitable marijuana.Granted, all of the above has to be characterized as long-term prospects for Canopy -- with the length of the term depending upon the alacrity with which the U.S. Congress passes new laws legalizing cannabis. In the nearer term, though, Mattson still sees Canopy "more than" doubling production in Canada sequentially in fiscal Q1 2020, and nearly doubling revenue from $689 million for the full fiscal year 2020, to reach $1.3 billion in fiscal 2021.It has been a tough period for Canopy investors who saw co-CEO Bruce Linton stepping down. Mattson noted, "Though disruption in the upper management ranks as we have seen with the departure of CEO Bruce Linton earlier this month could be a viewed as a warning sign, we are willing to look past the issue for now. We believe that Mr. Linton helped create a strategically sound asset that is the leader in the space and extremely well positioned in terms of expansion into Europe and potentially into the U.S. We would expect that under major shareholder Constellation Brands’ supervision, Canopy will install a seasoned executive who can capitalize on an already sound foundation."For this reason, we are willing to look past potential short term issues and recommend the shares," the analyst concluded.To read more on the nitty gritty of what’s going on in the rising cannabis industry, click here.Read more on CGC: * Three Big Reveals as Jefferies Meets With Canopy Growth’s (CGC) New CFO * Canopy Growth: What CEO’s Exit Means for the Stock * Canopy Growth May Never Reap the Benefits of Acreage Holdings * Canopy Growth (CGC) Stock: Buy the Dip or Pump the Brakes? More recent articles from Smarter Analyst: * Aurora Cannabis (ACB) Wins a 'Buy' for Rolling Up the Marijuana Industry * There's Light at the End of the Tunnel for Canopy Growth (CGC) Stock, Analyst Says * Organigram (OGI) Reported a Strong Quarter, But Don’t Buy the Stock Just Yet * More Gains Ahead for Cannabis Stock Curaleaf
Miami-based investment banker Ladenburg Thalmann waded into the marijuana patch Wednesday, initiating coverage of a quartet of cannabis stocks. Unsurprisingly, among these was Aurora Cannabis (ACB), currently the No. 2 Canadian cannabis company by market capitalization and, as analyst Glenn Mattson pointed out, owner of "the top 5 selling [marijuana] brands in British Columbia."In a stats-heavy initiation report, Mattson laid out its investment case for Aurora Cannabis. The analyst rates Aurora Cannabis stock a 'buy', with a $9 price target, which implies nearly 21% upside from current levels.On production RatesAt the end of March 2019, Aurora Cannabis boasted an annual production capacity of 65,000 kilograms of cannabis product. By early next year, the company expects to more than double that capacity to 150,000 kg. More incredibly, by the end of next year, the company will quadruple that number -- and be growing 625,000 kg per year by the end of calendar year 2020.Cost of production at some facilities is approaching $1 per gram, an industry low."One feature of this company is that they look to bring industrial scale to their growing facilities. The benefit of this approach is that they lower their average cost significantly. In the case of the company’s largest facilities like Aurora Sky and Aurora Sun, the production costs per gram are expected to be under $1 once the space is fully functional," Mattson noted.On expansion -- at home and abroadSince 2016, Aurora Cannabis has effected 18 "strategic acquisitions" and made 12 "strategic investments ... across the value chain."Internationally, the company now operates 15 global production facilities and is "active" on five continents and in 24 countries, including Australia, the Cayman Islands, Denmark, Germany, Italy, Lithuania, Malta, Mexico, Poland, and South Africa (and Canada, of course). Its activities range from cultivation to processing to retail (in order to gain "insight into trends as they evolve in the industry"). While most cultivation and processing is currently conducted in Canada, the company purchased a 51% ownership stake in cannabis cultivator "Gaia Pharm" -- now renamed Aurora Portugal -- in February 2019.Mattson points out that "While some firms are being cautious about expansion with the possibility that the Canadian market may see oversupply, Aurora is taking the view that the market for cannabis will be global and it can export to areas like Europe if the Canadian market sees saturation."On target marketsThe Canadian adult recreational market will provide the nearest term opportunity for growing sales for Aurora Cannabis. The company is especially keen to expand into derivative consumables such as vapes and edibles -- which Canada is expected to permit beginning in December -- in hopes that these forms of cannabis will both "attract a broader customer base" (i.e. boost revenue) and also command higher average selling prices (i.e. increase profits).What's importantA lot has already been written about the Canadian cannabis industry since legalization occurred on October 17 -- and even before. In Mattson's report, we just want to highlight one tidbit that might otherwise escape notice:According to the analyst, "ACB achieved 4 of the top 5 selling brands in British Columbia in the early weeks of adult-use cannabis legalization." At the same time, Mattson notes that "ACB saw 20% market share from October 17th legalization."Do you see the disconnect here? The seller of 80% of the five top-selling marijuana brands (albeit in just one representative province) in Canada nonetheless has only 20% market share in the country. This speaks to the very fractured nature of the Canadian cannabis industry at this point in time -- and explains why one of the first things Aurora began doing was rolling up some competitors and buying stakes in others, concentrating power under its own brand name.Given the rapid rate of production growth this has helped create, Mattson thinks this was a smart move.To read more on the nitty gritty of what’s going on in the rising cannabis industry, click here. Read more on ACB: * Why Aurora Cannabis Is Likely to Attract More Institutional-Level Investment * Aurora Cannabis (ACB) Is Firing on All Cylinders * Aurora Cannabis: Great Prospects… That Are Fully Priced Into the Stock Already * Don’t Jump on the Bandwagon for Aurora Cannabis (ACB) Stock More recent articles from Smarter Analyst: * There's Light at the End of the Tunnel for Canopy Growth (CGC) Stock, Analyst Says * Aurora Cannabis (ACB) Stock Wins a 'Buy' for Rolling Up the Marijuana Industry * Organigram (OGI) Reported a Strong Quarter, But Don’t Buy the Stock Just Yet * More Gains Ahead for Cannabis Stock Curaleaf
(Bloomberg Opinion) -- Slimming down appears to be paying off for Novartis AG. CEO Vas Narasimhan has refocused the Swiss pharma giant around drugs by selling off eye-care business Alcon and its remaining consumer-health interests. Second-quarter earnings that beat Wall Street expectations Thursday and a big guidance boost showed the benefits of the strategy. Shares hit an all-time high in early trading even though the stock was already up over 20% year to date to that point and trades at a premium to peers. Novartis is benefiting from greater exposure to its drug business, which has more potential than the units it ditched. Simpler businesses are easier to understand and value, so it makes sense that the market has responded well to these moves. At this price, though, the strategy inherently exposes investors to more downside and volatility. The reason some drugmakers diversify is to add steadier revenue so they can better weather the booms, busts, and worrying product concentration that come with developing novel medicines. Novartis has a robust set of newer drugs, which is likely why it felt confident enough to get rid of other units. It has supplemented its arsenal further with a series of acquisitions as it continues its strategy by slimming down generic unit Sandoz.Psoriasis drug Cosentyx and heart medicine Entresto are the two drugs most key to the company’s near-term success. They helped drive the pharma unit’s 9 percent sales growth in the second quarter relative to the same period last year. There are high expectations for continuing growth, but they come with significant risks.A new rival from AbbVie Inc. recently entered the already crowded market Cosentyx competes in, and others are on the way. While Entresto has turned from a slow starter to a growing success story, a big chunk of its potential depends on expanding to new markets. Results are due from a late-stage trial in a new indication in the next few months. Positive indications will help justify the company’s current valuation. A failure could bring current momentum for the drug and Novartis’s more exposed stock screeching to a halt. Also, growth may not look as robust when sales begin to decline for two other blockbusters – cancer drug Afinitor and multiple sclerosis medicine Gilenya – in the next few years. That puts weight on the company’s most recent launches and pipeline. Those new products may be able to bear it; the company had a breast cancer drug, an MS medicine, and a groundbreaking gene therapy approved in the first half of the year. Late-stage data is due in the near term for potential blockbuster asthma and eye drugs as well as another MS drug. Still, weak launches or disappointing data could erode confidence in the company’s growth trajectory. Novartis executed its transition to a pure pharma firm well. There’s still a chance that the rapturous investor response is in part a sugar high. To contact the author of this story: Max Nisen at firstname.lastname@example.orgTo contact the editor responsible for this story: Beth Williams at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Max Nisen is a Bloomberg Opinion columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
AC Immune (ACIU) initiates phase I study of ACI-3024, a Tau Morphomer inhibitor, for the treatment of neurodegenerative diseases like Alzheimer's disease.
Aurora Cannabis Inc. shares fell 2.3% in early trade Thursday, after BofA Merrill Lynch downgraded the stock to neutral from buy and lowered its stock price target to $8 from $10, on concerns about the company's cash burn. "Aurora has emerged as one of the best operators in the cannabis sector, with industry leading scale and margins even vs other large peers, and global optionality," analyst Christopher Carey wrote in a note to clients. "However, despite this, and a focus on profit, (CQ2 positive EBITDA target), it is burning cash and by our estimates could be cash negative by CQ120 (absent financing), namely if a large convertible debenture due in CQ120 stays out of the money." Even if its current cash burn were to improve, Aurora will likely need funding in the next few quarters," said the analyst The company has access to about C$100 million in a credit facility, but a convertible note that matures in the first quarter of 2020 will likely need to be paid in cash, he wrote. Shares have gained 47% in 2019, while the S&P 500 has gained 19%.
Investors need to pay close attention to CannTrust (CTST) stock based on the movements in the options market lately.
Aurora Cannabis Inc. (NYSE: ACB) announced Thursday it has won the Italian government’s public tender to supply medical marijuana in Italy. Aurora Cannabis was the only company to meet the demanding requirements of the tender, with the Italian cannabis market being one of the most strictly regulated in the world. Benzinga's Cannabis Capital Conference heads to Detroit on Aug. 15 -- Click here to learn more!
Brightfield Group estimates that the CBD market could hit about $23.7 billion by 2023. However, regulatory hurdles could impact the US market.
When the year started, Hexo (NYSEAMERICAN:HEXO) stock got off to a nice start. The shares went from $5 to $8 -- riding the cannabis bull wave spurred by the legalization in Canada. But unfortunately, the expectations were too exuberant. Since late April, the HEXO stock price has gone into reverse; right back to $5.Source: Shutterstock But the company is not alone. Various other cannabis stocks have also been in the downtrend, such as Canopy Growth (NYSE:CGC), Aurora Cannabis (NYSE:ACB) and Cronos Group (NASDAQ:CRON). For the most part, all have had challenges in scaling up for the enormous demand in the industry.Now in the case of Hexo Corp stock, the latest earnings report was particularly disappointing. The company reported revenues of 13.02 million CAD, compared to the Street estimate of 14.8 million CAD. In fact, there was a quarter-over-quarter drop of nearly 9%. There was also weakness in the average price of adult-use dried grams as well as the average gross selling price per gram.InvestorPlace - Stock Market News, Stock Advice & Trading TipsYet the choppiness should not be a surprise. The cannabis is still in the early stages and there will be growing pains. * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip But despite all this, I still think HEXO stock represents an interesting opportunity. And to see why let's take a look at the following catalysts: HEXO Stock: ScaleWhile at an investor conference, Tilray (NASDAQ:TLRY) CEO Brendan Kennedy and CFO Mark Castaneda provided some interesting insights about the cannabis opportunity. One of their main contentions was that there will ultimately be a handful of major winners in the market. After all, a company will need a global platform to realize economies of scale so as to provide competitive pricing.Granted, as for HEXO, the company has struggled to ramp up production. Yet this should prove temporary. The company already is the dominant player in the Quebec market (which is the second largest in Canada). What's more, HEXO has began construction of a 323,000 square-foot facility in Greece. The acquisition of Newstrike Brands should also be a boost.Keep in mind that Hexo's management has reiterated its aggressive growth for revenues. For fiscal 2020, the forecast is for 400 million CAD. HEXO Stock: Strategic PartnershipHEXO has entered a 50-50 strategic relationship with Molson Coors (NYSE:TAP). Both parties will develop drinks that are infused with cannabis. Consider that the goal is to begin selling in Canada on Dec. 17.Gauging the potential impact of this is tough. But having the expertise, marketing capacity and distribution of TAP will be significant.But this is likely to just be one of the major deals for HEXO. During the latest earnings conference call, CEO Sebastien St.-Louis noted that he is talking to over 60 potential partners - and that there should be another deal announced by the end of the year. HEXO Stock: Liquidity and ValuationHEXO stock will soon be listed on the venerable New York Stock Exchange. This will put the company in a rare group, with only two other cannabis operators (CGS and ACB). The new listing will provide more visibility for the company - helping to snag partnerships and deals. But it will also mean more liquidity for the shares.Oh, and the valuation on HEXO stock is at fairly reasonable levels, at least compared to its other large rivals. For example, Bank of America (NYSE:BAC) analyst Christopher Carey believes it is the most attractive within his coverage universe - and he has a juicy $10 price target on the stock.Tom Taulli is the author of the upcoming book, Artificial Intelligence Basics: A Non-Technical Introduction. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip * 7 Services Stocks to Buy for the Rest of 2019 * 6 Stocks to Buy and 1 to Sell Based on Insider Trading The post 3 Reasons Investors Should Be High on Hexo Stock appeared first on InvestorPlace.
When limited supply meets excess demand on both the long and short sides of the market for a stock, outrageous volatility is sure to ensue.
Canadian pot producer Aurora Cannabis Inc said on Thursday it had secured a two-year contract to supply medical cannabis to the Italian government. The company will supply a minimum of 400 kg of medical cannabis to the country, one of the most strictly regulated medical cannabis markets in the world. Aurora said it will supply cannabis from its Canadian EU GMP certified facilities and imported into Italy through Aurora Deutschland, its wholly-owned European unit.
Cannabis stocks were mostly higher Wednesday, with Curaleaf leading the pack after announcing an $875 million stock-and-cash deal that will help it expand into new states, including Illinois.
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For Anheuser-Busch InBev’s deal-hungry chief executive Carlos Brito, the initial public offering of its Asian business held out a beguiling prospect. The almost $10bn that the world’s biggest brewer hoped to raise would help foot some of the bill for a decade-long acquisition spree.