Cannabis stocks have been so hot this year that many are wondering whether they can keep up such a torrid pace. Leading the way has been Tilray, who has seen its stock prices increase more than 500% since its initial public offering in July. Canopy Growth, buoyed by its industry-shaking investment from Corona-owner Constellation Brands, has also seen strong growth. One major industry analyst expects the good times to continue, as Yahoo Finance reported:
That’s at least the takeaway from Cowen analyst and cannabis bull Vivien Azer’s latest research note. Azer nearly tripled her revenue-growth based price target on Tilray (TLRY), the leading post stock, to $172 from $62, maintaining an outperform rating. She also boosted her price target for Canopy Growth Corporation (CGC) to $82 from $74.
The “well-capitalized cannabis industry has been evolving rapidly” and looks poised to take on a larger total addressable market than originally forecast, Azer wrote in the note. “Given the nascent stage of global cannabis, we believe that revenue growth should serve as the primary valuation methodology.”
And this revenue growth will come from what she sees as four key verticals: adult use, beauty and nutraceuticals, over-the-counter pain and sleep and pharmaceuticals, she said.
“We believe that all four of these verticals represent large market opportunities,” she said. Consumer industry veterans “are beginning to embrace the broad market potential for cannabis as a global, multi-dimensional category, given the talent migration to cannabis.”
Even though industry analyst Vivien Azer is bullish on the cannabis market, especially with legalization taking effect in Canada and medical going live in the UK, she wisely warns investors that volatility will be the norm. As someone who has a few shares of Tilray and Canopy, it is reassuring that a Cowen financial analyst, sees the potential of key cannabis stocks. While you will want to diversify and be prepared for some ups and downs, there are some positive signs that key stocks are poised to stay strong for the time being.
Learn the latest about cannabis stocks and other important aspects of the cannabis industry at the International Cannabis Business Conference in San Francisco on February 7-8, 2019. Don’t miss the opportunity to learn the latest and network with top investors and entrepreneurs from around the world. Be sure to get your early-bird tickets by January 18th to save!