UPDATE: Cantor Fitzgerald Starts Hexo Corp. (HEXO:CN) (HEXO) at Underweight
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(updated rating action, comment)
Cantor Fitzgerald analyst Pablo Zuanic starts Hexo Corp. (HEXO:CN) (NYSE: HEXO) at Underweight, PT Cdn$2.40.
The analyst comments "The company has big ambitions (aims to be top 2 in Canada, top 3 globally), and some of its previously stated targets may have helped the stock, but performance so far and announced plans todate are not aligned with the vision. For the nine months post rec legalization, it was the smallest LP in our coverage group of six in both rec and med, and it is losing market share while yielding the lowest prices per gram in the group. Although landlocked like OGI (i.e., no announced immediate plans outside Canada by either), it trades at a 60% premium to that stock. Generally, our estimates for the group are below consensus, but for HEXO FY20 (ending Jul) sales, we are 50% below. Furthermore, plans for 2.0 seem to relate mostly to beverages (2% of the cannabis TCM in the U.S.) via its 42.5% ownership in a JV with Molson Coors in Canada (which will not be consolidated). Plans for U.S. CBD and/or partnerships with other Consumer Packaged Goods (CPG) players have yet to be disclosed."
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