Aurora Cannabis Inc. (ACB.XTSE) shares moved more than 3% lower during Monday’s session after Cronos Group Inc. (CRON) sold its stake in Whistler Medical Marijuana Aurora for C$175 million in stock. While management expects that the strategic acquisition will add significant value, investors are concerned about potential dilution from the all-stock deal.
Melius Research analyst Rob Wertheimer started coverage on Aurora Cannabis stock with an Overweight rating and a price target of C$17 per share, calling it his top pick in the cannabis space. While the analyst firm anticipates overcapacity issues in the future, Wertheimer notes that Aurora has taken measures to capture market share while lowering production costs to preserve margins.
The industry faces a lot of uncertainty at the moment. While Canada legalized adult use and medical cannabis last year, analysts are divided about whether the market will be oversupplied in the not-too-distant future. Scientists at the University of California Berkeley also successfully created cannabis compounds in a lab rather than harvesting them, which could open the door to alternative production methods. Read more…..
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