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Home » Cannabis » Hexo’s Stocks Continue To Suffer A Cannabis Stocks Dive

Hexo’s Stocks Continue To Suffer A Cannabis Stocks Dive

by PublicWire
June 25, 2019
in Cannabis
Reading Time: 2 mins read
0

Cannabis company Hexo is still recuperating from its losses after disappointing investors following the announcement of its Q3 numbers and expectations weren’t met.

Hexo Corp. shares HEXO, -4.57% fell 1.7%, after Oppenheimer downgraded the stock of the Quebec-based company to perform from outperform and said it sees greater gross margin pressure than expected when it first initiated coverage of the stock in February.

“With our updated forecasts and incorporating Newstrike, we now view shares as more fairly valued,” analyst Rupesh Parikh wrote in a note to clients.

Back in March, Hexo acquired Newstrike in an all-stock deal valued at about C$263 million ($197 million). The analyst noted the stock’s 63% year-to-date gain, which compares with an 18% rise in the S&P 500 and is well ahead of some of the company’s peers.

“Although we are stepping to the sidelines, we still see many positives to the HEXO story longer term and believe the name should remain on the radar for investors,” said Pariksh.

Meanwhile, the company’s Q3 numbers raised eyebrows leading to a sudden dip from Hexo’s robust market performance prior to its announcement.

The net loss for the quarter to April 30 was C$7.75 million ($5.82 million), or 4 cents a share, after a loss of C$1.97 million, or 1 cent a share, in the year-ago period. The FactSet consensus was for a loss of 5 cents. Net revenue jumped to C$13.02 million from C$1.24 million, below the FactSet net sales consensus of C$14.8 million. The average gross selling price of an adult-use dried gram and gram equivalents was C$5.29 as of April 30, down from C$5.83 at the end of January, while kilograms sold of adult use grew to 2,759 from 2,537.

But Hexo’s stocks aren’t the only one suffering from the cannabis industry right as most cannabis stocks are down Tuesday, as the broader markets faltered and investors awaited the next key catalysts for the sector.

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