CannTrust stock is moving higher on Wednesday after CannTrust Holdings (TSX:TRST) (NYSE:CTST) provided an operational update. Moreover, an analyst at Citigroup started coverage on the stock with a high-risk buy rating.
Key Operational Updates
CannTrust Holdings is all set to become one of the bigger cannabis producers in the industry, and today, the company announced an update regarding its outdoor cultivation activities taking place in British Columbia. In addition to that, the company also provided an update about the shipment of products that it had sent to Australia.
After taking over 81 acres of land in British Columbia for the purposes of outdoor cultivation, CannTrust claimed that its annualized production for 2019 would be as much as 75,000 kilos.
However, the company has now stated that it has not yet got the crucial Health Canada permit to start cultivation, so its production for the year will now be between 0 kilos and 15,000 kilos.
Surprisingly, given that piece of news, CannTrust stock is trading higher by 1.50% to $5.05 on the NYSE. CTST stock is up about 3% so far in 2019 and trading just 15% higher from its 52-week low of $4.35.
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The ultimate quantum of cannabis that the company generates will be wholly dependent on when it receives the actual permit from Health Canada. This should not come as particularly good news for investors of CannTrust Holdings. Especially since the company also added that if the cultivation on the new site does not start on or before August 5 this year, then it would not have any extra harvest.
The company also stated that it is on the verge of agreeing to a lease on a 160-acre site for cultivation. Once the permits come through, then the two combined sites will give CannTrust production capabilities of 100,000 kilos to 200,000 kilos—but again, this is if the permits come through.
That being said, there was a positive update regarding the company’s international operations. CannTrust Holdings has sent its first consignment of CBD, THC, and blended products to Australia. Those products are going to be sold in the country by the company’s partner Cannatrek Ltd. Although the delay with the permit might seem like a blow, the long term targets of the company remain intact, which could be why CannTrust stock is moving up today.
Citigroup Sets $7 PT
Moreover, this morning, Wendy Nicholson, an analyst at Citigroup, started coverage on CannTrust stock and set a price target of $7 USD, a potential rise of 40% from the current market price. This, too, is no doubt encouraging investors at the moment.
Featured image: Canva
