Jefferies downgraded Canopy Growth Corp. /zigman2/quotes/200603886/composite CGC -7.78% /zigman2/quotes/202205609/delayed CA:WEED -7.64% on Friday and slashed its stock price targets for cannabis companies by an average of 50%, a day after a revenue warning from Hexo Corp. /zigman2/quotes/206508254/composite HEXO -6.00% /zigman2/quotes/200008967/delayed CA:HEXO -6.60% prompted a sharp selloff in the sector as investors moved to price in heightened risk. "With a number of negative headlines impacting the sector the last 6 months, and still with little sign of profitability, the sector has seen greater risk/volatility priced in," analysts Owen Bennett and Ryan Tomkins wrote in a note to clients. The analysts downgraded Canopy, the market leader, to hold from buy and cut their price target to C$25 ($18.8) from C$77. The analysts cut Hexo's stock price target to C$3.80 from C$7.70, cut Cronos /zigman2/quotes/206842762/composite CRON -9.22% /zigman2/quotes/202715342/delayed CA:CRON -8.77% to C$10 from C$15, lowered Aurora Cannabis /zigman2/quotes/210559470/composite ACB -3.86% /zigman2/quotes/203734337/delayed CA:ACB -4.76% price target to C$7 from C$14, cut Organigram /zigman2/quotes/209289540/lastsale OGI -4.50% to C8.20 from C10.50, cut Green Organic Dutchman /zigman2/quotes/204266798/delayed TGODF -3.00% /zigman2/quotes/206870535/delayed CA:TGOD -2.82% to C$2.40 from C$6.50 and lowered Tilray's price target to $25 from $57. At the same time, they upgraded Hexo to hold from underperform and upgraded Organigram and Flowr Corp. /zigman2/quotes/206895064/delayed CA:FLWR 0.00% to buy from hold. "The next 12 months price performance should see strong divergence between those who can execute/move to profit and the rest," the analysts wrote. Canopy shares fell 1.8% premarket. The stock has fallen 24% in 2019, while the ETFMG Alternative Harvest ETF has fallen 25% and the S&P 500 /zigman2/quotes/210599714/realtime SPX -0.90% has gained 17%.