Marijuana News Today: Analysts Gush Over Canopy Financial Report, Tilray Eyes U.S. CBD Market

Marijuana News Today
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Marijuana News Today

The marijuana news today is mostly full of good news, with several companies getting positive assessments from analysts while Tilray Inc (NASDAQ:TLRY) makes a big push into the U.S. cannabidiol (CBD) market with its latest acquisition.

Since most of the news is marijuana-stock-specific today, rather than major events impacting the industry as a whole, let’s get right into today’s biggest winners.

TLRY Stock

Starting off with the most impressive gains in the marijuana news today, we have Tilray Inc.

TLRY stock climbed nearly seven percent in early-morning trading today and finds itself up about the same over the past five days.

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The big win for Tilray in the marijuana news today came from its acquisition of FHF Holdings Ltd., the parent company of hemp food maker Manitoba Harvest. (Source: “Tilray to buy hemp food maker Manitoba Harvest for $419M amid broader U.S. CBD push,” BNN Bloomberg, February 20, 2019.)

The deal is valued currently at CA$419.0 million, but that is subject to change depending on milestones.

With the buy, Tilray will own one of the largest hemp food makers in the world.

This is significant, as Tilray has already signaled its intention to enter the U.S. CBD market in force.

Cannabidiol, you’ll recall, was legalized in the U.S. for cultivation on a federal level late last year via the Agriculture Improvement Act of 2018.

Several big-name marijuana companies have claimed they are now looking at ways to use the first legal entry to the country-wide cannabis market in the U.S. to expand their operations. The FHF acquisition is part of a buildup in anticipation of coming into the market.

Analysts price the U.S. CBD market at $20.0 billion by 2022. (Source: Ibid.)

Another interesting part of the deal—and one that marijuana bulls will appreciate—is that a large part of it was made up of cash, rather than stock. This is in an effort to prevent stock dilution, something current owners of TLRY stock will be happy to hear.

“When we look at how we see the CBD industry growing and emerging in the coming years, we thought that [Manitoba Harvest’s] supply chain would be an important aspect of our business that we needed to build out and acquire,” said Brendan Kennedy, chief executive officer of Tilray Inc.

He went on to say in the interview that there is “definitely an overlap” between its acquisition of Manitoba Harvest and its previous moves in the CBD market, and that more moves involving CBD are on the way. (Source: Ibid.)

Furthermore, Kennedy also said that Tilray is taking a long-term view of the industry, focusing not only on the Canadian market, but markets abroad as well.

This is all great news for Tilray. As I’ve been saying since 2019 began, finding a meaningful way into the U.S. cannabidiol market could be one of the biggest predictors of success this year for pot stocks.

While Tilray stock hasn’t been the strongest performer in 2019 so far, this is definitely a move in the right direction.

CGC Stock

While TLRY stock came away as the biggest winner to start trading today, long-term, it’s still hard to compete with Canopy Growth Corp (NYSE:CGC).

CGC stock gained 1.5% in early-morning trading today and climbed over seven percent in the past five days, as it is still enjoying a healthy boost from its Q3 financial report.

The report was very good. Revenue ballooned by 282% in the quarter, climbing to CA$83.0 million, up from CA$21.7 million in the same quarter in the previous year. (Source: “Canopy Growth Corporation Reports Third Quarter Fiscal 2019 Financial Results: Gross Sales of $98M; Net Revenue hits record $83M,” Canopy Growth Corp, February 14, 2019.)

This massive jump in revenue was helped along by a huge increase in sales, a result of Canadian recreational marijuana legalization.

The company sold over 20,000 pounds of cannabis in the quarter, a 334%  increase from Q3 2018.

Analysts are taking notice of the jump, with one of the top pot analysts on Wall Street, Vivien Azer, supporting Canopy Growth stock long-term. (Source: “Canopy Growth will be the biggest winner in Canada’s $9 billion marijuana market (CGC),” Business Insider, February 19, 2019.)

Today, Wall Street and I are in agreement, as I do see CGC stock performing very well for years to come, with the latest quarterly report only solidifying my support for Canopy Growth Corp.

HEXO Stock

Another marijuana stock on the upswing following ringing endorsements from analysts is Hexo Corp (NYSEAMERICAN:HEXO).

Analysts came out and priced HEXO stock at $7.00 within a year to 18 months, compared to its $5.88. (Source: “Cannabis stocks mixed in choppy trade with Canopy Growth and Hexo in focus,” MarketWatch, February 20, 2019.)

HEXO stock jumped three percent in early-morning trading today and nearly seven percent over the past five days.

I’ve long been a supporter of Hexo as one of the most undervalued stocks in the marijuana industry.

It has all the features of a bigger player (strong supply deals, partnerships, expanding supply capacity) with a marijuana penny stock price.

If you’re looking for massive growth potential, few compare in my mind to HEXO stock. In fact, the $7.00 price is on the low end; with my estimate that it will hit at least $8.00 by year’s end.

Whether it can maintain that price if a correction hits is another story, but I fully expect it to see at least 20% gains at some point in 2019.

TLRY, CGC, and HEXO Stock Performances

The performances of TLRY stock (black line), CGC stock (blue line), and HEXO stock (red line) over the past week are seen on the chart below:

Chart courtesy of StockCharts.com

Analyst Take

It was a busy day in the marijuana news today. Several marijuana stocks separated themselves from the pack with strong gains and even better long-term projections.

Tilray stock was the big winner as it gears up to enter the U.S. CBD market in a big way.

Meanwhile, analysts on Wall Street and elsewhere are endorsing two of my longtime favorite picks, CGC stock and HEXO stock.

Overall, it was a very strong day for marijuana stocks.