Jefferies downgraded Aurora Cannabis Inc. stock /zigman2/quotes/210559470/composite ACB +0.10% /zigman2/quotes/203734337/delayed CA:ACB +0.08% to underperform from hold on Monday and said the stock is still overvalued even after surrendering some of the strong gains made on the back of the election of Democrat Joe Biden as U.S. president amid expectations he will pursue a cannabis reform agenda. Aurora had gained 135% in the post U.S. election period, but those gains shrunk to about 70% after the company announced a plan to raise another $125 million via an equity offering. Analyst Owen Bennett said the gains were not based on fundamentals, but rather on a retail FOMO (fear of missing out) and short squeeze. "While perhaps unfair on retail buying into the run-up, we actually think the move was shrewd," Bennett wrote, reiterating a comment he made last week. "The reason is ACB will need cash in 2 key areas. One, it has sizeable near-term debt commitments. Two, ability to compete in the US effectively, first in US CBD, but then, more critically, if US THC opens, which could be sooner rather vs. later given US election developments. Being well capitalized will be key to Canadian competitiveness against US incumbents, and in fact given US cash needs, we would suggest even more sizeable dilution in the next 12-18 months is possible and likely." Bennett lowered his stock price target to C$4.93 ($3.76) from C$6.90. Aurora shares were slightly lower premarket and have fallen 73% in the year to date, while the Cannabis ETF /zigman2/quotes/213173823/composite THCX -0.27% has fallen 13% and the S&P 500 /zigman2/quotes/210599714/realtime SPX -0.54% has gained 11%.