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Sept. 20, 2019, 10:19 a.m. EDT

MKM Partners launches coverage of seven cannabis companies with cautious view

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By Ciara Linnane

MKM Partners initiated coverage of five Canadian cannabis companies and two U.S. multi-state operators on Friday with a cautious outlook, arguing that the nascent industry is likely to see supply exceed consumer spending growth, putting pressure on the current business model. Analyst Bill Kirk, an executive director at MKM, assigned sell ratings to Curaleaf Holdings Inc. /zigman2/quotes/205334348/delayed CURLF -0.38% /zigman2/quotes/203485866/delayed CA:CURA -1.20% and Aurora Cannabis Inc. /zigman2/quotes/210559470/composite ACB +7.76% /zigman2/quotes/203734337/delayed CA:ACB +7.81% , put neutral ratings on Canopy Growth Corp. /zigman2/quotes/200603886/composite CGC +5.22% /zigman2/quotes/202205609/delayed CA:WEED +4.96% , Tilray Inc. /zigman2/quotes/209129655/composite TLRY +3.50% , Cronos Group Inc. /zigman2/quotes/206842762/composite CRON +5.48% /zigman2/quotes/202715342/delayed CA:CRON +5.17% , and gave buy ratings to Acreage Holdings Inc. /zigman2/quotes/205165963/delayed ACRGF +2.01% and Hexo Corp. /zigman2/quotes/206508254/composite HEXO +17.00% . "Among vice categories, cannabis is the most expensive on a per serving basis (C$2.14) followed by wine (C$2.10), cider (C$1.90), beer (C $1.47), and spirits/liquor (C$1.42)," Kirk wrote in a note to clients. "Despite what appears to be incremental demand, cannabis prices continue to fall. This does not bode well for profitability, especially considering the top-seven cultivators (growers) are already harvesting at a rate nearly equal to legal channel needs in Canada." The cannabis sector has had a rough summer with shares mostly selling off amid a rash of scandals and disappointing earnings. The ETFMG Alternative Harvest ETF /zigman2/quotes/204332491/composite MJ +3.67% has fallen 28% in the last three months, and is now down about 7% in the year to date, while the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.28% has gained 20%.

/zigman2/quotes/205334348/delayed
US : U.S.: OTC
$ 6.24
-0.02 -0.38%
Volume: 210,695
Oct. 17, 2019 3:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$2.90 billion
Rev. per Employee
N/A
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/zigman2/quotes/203485866/delayed
CA : Canadian Securities Exchange
$ 8.20
-0.10 -1.20%
Volume: 218,433
Oct. 17, 2019 3:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$3.84 billion
Rev. per Employee
N/A
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/zigman2/quotes/210559470/composite
US : U.S.: NYSE
$ 3.89
+0.28 +7.76%
Volume: 21.27M
Oct. 17, 2019 6:30p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$3.71 billion
Rev. per Employee
$94,401
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/zigman2/quotes/203734337/delayed
CA : Canada: Toronto
$ 5.11
+0.37 +7.81%
Volume: 8.79M
Oct. 17, 2019 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$4.88 billion
Rev. per Employee
$123,163
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/zigman2/quotes/200603886/composite
US : U.S.: NYSE
$ 20.76
+1.03 +5.22%
Volume: 7.01M
Oct. 17, 2019 6:30p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$6.86 billion
Rev. per Employee
$115,039
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/zigman2/quotes/202205609/delayed
CA : Canada: Toronto
$ 27.31
+1.29 +4.96%
Volume: 1.74M
Oct. 17, 2019 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$9.05 billion
Rev. per Employee
$150,142
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/zigman2/quotes/209129655/composite
US : U.S.: Nasdaq
$ 22.49
+0.76 +3.50%
Volume: 1.21M
Oct. 17, 2019 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$2.12 billion
Rev. per Employee
$62,689
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/zigman2/quotes/206842762/composite
US : U.S.: Nasdaq
$ 8.86
+0.46 +5.48%
Volume: 40.96M
Oct. 17, 2019 4:00p
P/E Ratio
19.99
Dividend Yield
N/A
Market Cap
$2.87 billion
Rev. per Employee
$55,248
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/zigman2/quotes/202715342/delayed
CA : Canada: Toronto
$ 11.60
+0.57 +5.17%
Volume: 4.35M
Oct. 17, 2019 4:23p
P/E Ratio
19.60
Dividend Yield
N/A
Market Cap
$3.76 billion
Rev. per Employee
$70,780
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/zigman2/quotes/205165963/delayed
US : U.S.: OTC
$ 6.08
+0.12 +2.01%
Volume: 146,364
Oct. 17, 2019 3:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$4.00 billion
Rev. per Employee
N/A
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/zigman2/quotes/206508254/composite
US : U.S.: NYSE
$ 2.89
+0.42 +17.00%
Volume: 8.35M
Oct. 17, 2019 6:30p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$634.22 million
Rev. per Employee
N/A
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/zigman2/quotes/204332491/composite
US : U.S.: NYSE Arca
$ 20.06
+0.71 +3.67%
Volume: 1.37M
Oct. 17, 2019 8:00p
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/zigman2/quotes/210599714/realtime
US : S&P US
2,997.95
+8.26 +0.28%
Volume: 1.62B
Oct. 17, 2019 5:02p
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