Over the course of a year, cannabis stocks have invested in investing. Fortunes have already been made in an industry that is estimated to be worth $ 146.4 billion by 2025. The next few months will be critical for many companies and we have seen many rumors surrounding these companies: Aphria Inc (NYSE: APHA), Aurora Cannabis Inc (NYSE: ACB), and PotNetwork Holdings, Inc.
Aphria Inc. continues to fight against a takeover bid
Aphria Inc. has received strong support from famed short seller Andrew Left. Its firm, Citron Research, predicted in December that the stock would rise to $ 8 before 2018 and these predictions remained.
The recent series of good news from Aphria, including the fact that it would be one of the first producers to sell its own cannabis in Europe, has helped boost the stock. Despite this, most analysts are watching closely the ongoing drama of Green Growth Brands Inc. and its hostile takeover bid.
GGBXF intends to continue with its attempts to acquire APHA even though the latter insist that offering $ 6.95 per share is "significantly undervalued" and could "destroy the value for Aphira's shareholders". The board recommended that shareholders reject the offer and "do not take action."
In general, analysts predict an average target price of $ 14.25 per share, with one analyst setting the target price as high as $ 25. A Reuters survey of 10 analysts showed generally positive sentiments: 3 recommended a purchase, 4 predicted that the stock would outperform, 2 recommending that investors hold and 1 predicting that the stock would yield a lower return.
Aurora Cannabis Inc. prepares to launch its fiscal second quarter finances
It could be said that Aurora Cannabis is one of the most important players in the cannabis sector and the investment world expects its finances for the second quarter of 2019 with great expectation. These will be the first financial data to include the results of the first days of the launch of the Canadian legal recreational marijuana market, which makes them incredibly important.
Aurora took a look at the results of the second quarter in January and what they showed was promising. The company's guidance suggested revenues between CA $ 50 million and CA $ 55 million, which does not reach the analysts' consensus of CA $ 67 million. Despite losing this objective, Aurora's actions skyrocketed in the news, but why?
As Gary Bourgeault suggests, it's because Aurora did not fail, the analysts did. Investors do not seem particularly interested in the figures themselves, but in the fact that they continue to grow. Assuming that Aurora's guidance is correct, on Monday they will report a growth of almost 70% over the previous quarter, which will probably excite investors.
Despite this, there are some worrying trends for Aurora and other big cannabis players that optimistic investors seem to have overlooked. The elephant in the room, as pointed out by Stone Fox Capital, is the scenario of excess supply that could threaten to strangle growth. International growth is still slow and cannabis Aurora, like a series of smaller players, threatens to flood the market with a product that simply is not in demand.
Casualties in other cannabis stocks also overshadow Aurora's prospects. The company has taken strong advantage of its positions in other shares and Harvest Moon CEO Cannabis Co., Robert Doxtator, estimates that the company has experienced paper losses of CA $ 425 million in the December quarter.
Despite this, according to Reuters, analysts maintain a consensus higher than the stock and marketwatch has an average analyst price target of $ 12.08.
PotNetwork Holdings, Inc., a US emerging CBD player created to make waves
PotNetwork Holdings, Inc. is a growing operator in the US CBD market. The company is willing to take advantage of the Agricultural Law. This flagship legislation eliminates all cannabis fiber products, such as hemp, from the Controlled Substances Act.
In the English language, this means that it is now legal to manufacture, distribute and sell CBD products derived from hemp at the federal level. The federal government of EE. UU It has legalized a market whose value is estimated at $ 22.2 billion by 2022 and will grow faster than any other cannabis subsector.
PotNetwork Holdings is one of the few companies that have quietly positioned themselves in a market that nobody else realized existed. In January, Harbinger Research shed light on the company's potential in a research report.
The analyst, Brian Connell, gave the company a 1-year target price of between $ 0.192 to $ 0.337 with a "Strong speculative buy" rating. This means that the analyst believes that the shares could be worth 50% more in relation to the general market for US stocks in the next 12 to 14 months.
The analyst supported his predictions by pointing out POTN's proven ability to grow and build a brand through its subsidiary Diamond CBD. For the third quarter of 2018, the company had generated more than $ 18.1 million in revenue, surpassing all of its efforts in 2017. Harbinger was also impressed by the company's ability to target subsets of the CBD market, including CBD for Pets and food like coffee.
The company is still in its infancy, but the stock has experienced an appreciation of 88.24% YTD and is well positioned to take advantage of the opportunities offered by the agricultural law.
The cannabis sector is in a basin
The cannabis sector is interesting at this time because analysts' predictions do not seem to matter much to investors. This is partly due to the fortunes that were made in the early days of Canadian legalization, but it is also due to the fact that, despite its size, the cannabis sector is still very young.
It is extremely difficult for analysts to make predictions in light of the uncertain regulatory landscape. The unexpected increase of the CBD sector in the back of the Agricultural Law is a perfect example of the unpredictable potential of the cannabis sector.
The problems of excess supply could threaten to strangle the growth of the main cannabis players, but at the same time, relaxing attitudes toward cannabis could open up incredible opportunities in the coming years.