In a recently released analyst research report, Beacon Securities Managing Director of Equity Research, Russell Stanley, reiterated his buy rating on shares of HEXO Corp. (TSX:HEXO) (NYSE:HEXO) with a price target that suggests some big upside to come.
Regarding the Newstrike acquisition, Stanley noted, “This acquisition expands HEXO’s aggregate annualized cultivation capacity from 108,000kg to 150,000kg and it adds sales relationships with Alberta, Saskatchewan, Manitoba, Nova Scotia, PEI and New Brunswick. This gives HEXO sales relationships in all Canadian provinces, excluding Newfoundland and Labrador. As we believe that only three companies have sales relationships into all ten provinces, HEXO is extremely well-positioned relative to the pack.”
Russell Stanley’s price target of $14.00 CAD per share implies a potential upside of approximately 45.68% based on the last traded price of $9.61 CAD per share on the TSX.
According to Cantech Letter, “The analyst contends that HEXO is now trading at 14x his C2020 EBITDA estimate, which would represent a 33-per-cent discount to the 22x average of its broader peer group, a 53-per-cent discount to the 31x average among companies with a plus-$1 billion market cap and a 71-per-cent discount to the 50x average for other US-listed cannabis companies.”
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