The past months have been an increasingly difficult period for most cannabis companies, and there are hardly any cannabis firms that have been able to insulate themselves from the troubles. HEXO Corp (TSX:HEXO) (NYSE:HEXO) has not been an exception in that regard, and HEXO stock has plummeted considerably from its 52-week high.
HEXO stock has lost as much as 75% from these levels, and despite displaying a bit of stability in recent times, the company needs more if its stock price is to improve. Hence, market watchers are eagerly awaiting HEXO’s first-quarter earnings report, which is going to be released on Monday, before markets open.
All Eyes on Earnings
The company needs to deliver a strong quarter if the stock is to bounce back in the near term. Moreover, the legalization of derivatives in Canada has also given HEXO an opportunity to eventually cash in on a new market and generate growth in the near future. The company’s cash position remains a worry, but if it can show that it is on track to meet its goals for fiscal 2020, then it can somehow get through the period until growth resumes.
The main target for the company should be growing its revenue on a sequential basis. If one ignores the revenue brought in through the acquisition of Newstrike Brands, the company’s revenue has actually gone down sequentially in the past two quarters. An improvement in that metric could be a major boost for HEXO.
At the time of writing, HEXO stock is up 0.90% at $2.25.
Wall Street analysts expect the company to marginally beat the previous quarter’s revenue of $15.4 CAD million. Analysts estimate the company to generate $15.75 million CAD. This isn’t a quarter that is going to solve the company’s problems, but growth in revenue will possibly restore market confidence.
However, if the company fails to grow its revenue, then it could prove to be a disaster, and analysts believe that the market will punish HEXO stock as a result.
Featured image: Canva