Following yesterday’s announcement from CannTrust Holdings Inc. (NYSE:CTST) (TSX:TRST) stating that Health Canada notified the company that its greenhouse facility in Pelham, Ontario is non-compliant with certain regulations, multiple Wall Street analysts have downgraded shares of the Canadian cannabis company.
This comes as no surprise given the fact that the non-compliant rating was based on observations by the regulator regarding the growing of cannabis in five unlicensed rooms and inaccurate information provided to the regulator by CannTrust employees.
Roth Capital Partners Director and Research Analyst, Scott Fortune, downgraded shares of CannTrust to a hold rating while cutting his price target from $8.50 USD per share to $4.00 USD per share, which actually implies a potential upside of approximately 8.11% based on the last traded price of $3.70 USD per share in the pre-market session.
According to TheFly, “Roth Capital analyst Scott Fortune downgraded CannTrust to Neutral from Buy, noting that the company has taken a “huge credibility hit” from the issued Health Canada non-compliance rating audit report, in which Health Canada has placed a hold on about 5,200 kg of dried cannabis. To be determined is Health Canada’s enforcement response to what he deems a “flagrant lack of compliance” surrounding cultivating cannabis in five unlicensed rooms over a five-month timeframe. The analyst believes the operations misstep will have material impact to financials.”
As noted above, shares of CTST are already trading down into the red during the pre-market trading session.
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