HEXO Stock Jumps Another 5% on Analyst’s Optimism

HEXO stock

HEXO stock continues to gain positive momentum today as the stock has gained 15% since Friday after an analyst at MKM Partners rated the stock a Buy and set a bullish price target on HEXO Corp (TSX:HEXO) (NYSE:HEXO).

Short-Term Bullish Reaction

The last few months have been tough for much of the cannabis sector, and many of the stocks that had earlier recorded highly impressive gains gave them all up in the period. In this regard, it should be pointed out that Canadian cannabis company HEXO had also experienced the difficulties associated with the turmoil.

However, on Friday the company received a major boost after an analyst at MKM Partners classified HEXO stock as a ‘buy’ and set a target price of $12 CAD, which indicates a potential 129% gain (from Thursday’s closing price of $5.24 CAD) over the next year.

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Many of the Canadian cannabis operators have been suffering from low cash reserves and high debt, thereby making it difficult for many investors to put their money into those stocks. However, HEXO does not seem to be suffering from this difficulty. It has a healthy cash reserve of $129 million and its debts amount to only $20 million. That makes it one of the few exceptions in the industry and a stock worth tracking.

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The development has now led to a massive rally on HEXO stock for the second consecutive day, putting it up another 5% at $4.58 on NYSE in early trade today after soaring 10.7% in Friday’s trading session.

Bill Kirk, the analyst in question, stated that he is impressed with the company’s business model and believed that it could turn itself into a sustainable business soon.

Due to these factors, Kirk classified it as a buy and set a target price of $12.00 CAD for HEXO stock. Kirk stated that its joint venture with Molson Coors (NYSE:TAP) could prove to be a huge advantage here as the ingredients it produces could then be incorporated into beverages.

Moreover, the analyst believes that those ingredients could, in fact, be used in edibles and cosmetics as well. Considering the fact that Canada is all set to legalize edibles sales in December this year, it could prove to be a major boost for HEXO stock and result in further growth for the company.

>> Read More HEXO News

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