HEXO Stock Gains Momentum After Analyst Turns Bullish

HEXO stock

HEXO stock is on the rise after HEXO Corp (TSX:HEXO) (NYSE:HEXO) received a positive outlook from a Bank of America analyst.

On Wednesday investors were encouraged by the brokerage firm's optimism, which pushed HEXO stock higher by 11.76%, closing $6.65 on the NYSE American exchange. Today, the stock is up another 4% to 6.92% in early morning session.

Low Valuation

The Bank of America analyst commenced the coverage of HEXO stock, recommending it as a buy with a price target of $10, which is around 66% higher than the closing price of the stock on Wednesday. Christopher Carey, the Bank of America analyst, indicated HEXO stock is a top pick in the cannabis industry.

One of the main reasons that Carey pointed to was HEXO stock's low valuation. The Quebec-based cannabis producer has seen its market capitalization rise to $1.4 billion at recent prices, a large amount considering HEXO has an annual revenue of $40.1 million. Although this valuation is a nosebleed in other industries, it is nonetheless low enough to ensure HEXO is one of the most fairly priced Canadian cannabis companies listed on a US exchange.

>> MedMen Stock: Preliminary Q3 Report has Investors Moving

Future Prospects and Outlook

The company already has distribution agreements with four Canadian provincial governments, which could earn the company considerable revenue in the tune of $1 billion in the next few years. Beyond Canadian boundaries, HEXO stock has been taking steps to ensure it becomes a leading global player in the cannabis market that is likely to hit $630 billion CAD per year.

To make an impression in the global sphere, the company has begun development of a 350, 000 square foot facility in Greece, which will enable HEXO to supply medical marijuana in the growing EU market.

HEXO’s working capital at the end of January was $224 million CAD although its operations lost $6.9 million CAD in the quarter ended January.

HEXO stock is one of the most watched cannabis stocks at present. The stock has gained over 70% so far in 2019.

>> Read More HEXO News

Featured image: Canva

If You Liked This Article Click To Share