Barclays analyst Guarav Jain on Thursday initiated coverage of three cannabis stocks but said their businesses are limited by the relatively small size of the legal market in Canada. Barclays launched overage of Tilray /zigman2/quotes/209129655/composite TLRY -5.09% and Cronos /zigman2/quotes/206842762/composite CRON -2.45% with an underweight rating and price targets of $10 and $5.50 respectively. Barclays also initiated coverage of Canopy Growth /zigman2/quotes/200603886/composite CGC -1.80% with a price target of $14 and a equal weight rating. Canada will account for about 30% of Canopy's and Tilray's operating enterprise value, and about 40% for Cronos. "The rest of their enterprise value is attributable to optionality in the U.S. market" through alliances with U.S.-based multi-state cannabis operators, he said. "Canadian companies cannot directly invest in the US market. They are entering into structured transactions with U.S. multi-state operators that would convert into minority stakes upon U.S. federal legalization. We think the benefit of these deals accrues to the shareholders of MSOs rather than those of the Canadian companies."