CannTrust stock is moving upwards on Monday after research firm ValuEngine upgraded CannTrust Holdings (TSX:TRST) (NYSE:CTST) to a Buy, two months after Zacks made a similar move.
Summer of Scandal
Arguably the worst-performing pot stock throughout the first year of legalization, CannTrust has endured a torrid time in 2019. Thrust into the spotlight in July after Health Canada uncovered cannabis growing in unlicensed cultivation rooms at the company's Pelham, Ontario facility, chaos ensued at an executive level and led to an almost complete capitulation in the value of CannTrust stock.
Upon discovery of the illicit cultivation rooms, the company was forced to destroy approximately $70 million USD of cannabis product, with the ensuing investigation revealing that knowledge and authorization of the scandal went right to the very top level of the company. Lawsuits and dismissals followed, with both CEO Peter Aceto and President Eric Paul being removed from the company, as well as the firm being forced to restate financial results for the three and six months ended June 30, 2019. CannTrust stock has fallen a huge 88% in the last 11 months.
Has CannTrust Stock Bottomed Out?
However, CannTrust Holdings remains one of the largest cannabis companies in the Canadian market, and while it is still yet to restate those results and remains under a management cease trade order (MCTO), some analysts are speculating that CannTrust stock may finally have bottomed out. Interactive brokerage firm ValuEngine has upgraded its position on the fallen pot stock from a Hold to a Buy after analysts at Zacks made a similar movement in mid-November.
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Cannabis 2.0 Plans
The most likely reason for the upgraded rating is the imminent launch of the cannabis 2.0 market, which will see a wave of derivative products, such as edibles and vapes, arrive on stream in the coming weeks. While CannTrust Holdings has remained reasonably quiet on its 2.0 product plans as it continues to deal with the fallout from a summer of scandal, it was reported in September that the company is preparing a range of products, including THC-infused water and coffee, and even pet food and chewable dog treats.
CannTrust stock is currently trading up nearly 8% at $1.17 in New York, having crossed the one-dollar threshold on January 3 just weeks after being handed a delisting warning by the exchange for trading below one dollar for 30 consecutive days.
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