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.
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.
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.
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