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Auxly Analyst: Cannabis Stock Is 'Flying Under The Radar'

Auxly Analyst: Cannabis Stock Is 'Flying Under The Radar'

Auxly Cannabis Group Inc. (OTCQX: CBWTF) has been "flying under the radar," according to a recent analyst report penned by Cantor Fitzgerald's Pablo Zuanic.

The Analyst's Take: The Toronto-based company's stock is mispriced due to "its smaller scale (a valid point in 2019), lack of liquidity, absence of earnings conference calls, and, on the surface, its complex stock derivative structure," Zuanic writes.

The Thesis: Cantor maintains an Overweight rating for Auxly, touting its "2.0 franchise" as valuable to those shopping for scale and specific segment strength (i.e. the company's pre-roll aspirations).

"As a result, we believe it is mispriced at 2.1x projected CY22 sales vs. 5-10x for better-known peers (and vs. mid/high teens for LPs in which CPG companies have made large investments)," Zuanic adds. "Our 12-month [price target] of C$0.85 conservatively reflects 4x CY22 sales using a 1,038mn fully-diluted share count."

Tobacco giant Imperial Brands PLC (OTCQX: IMBBF) owns a 20% stake in Auxly. 

Benzinga's Take: Expect cannabis stocks to be volatile in the near term. The following cannabis ETFs were in the red Wednesday: 

  • The ETFMG Alternative Harvest ETF (NYSE: MJ): dipped 0.93%
  • The AdvisorShares Pure Cannabis ETF (NYSE: YOLO): slipped 1.57%
  • The Cannabis ETF (NYSE: THCX): tumbled 2.21%
  • The Amplify Seymour Cannabis ETF (NYSE: CNBS): was down 1.57%

Given the unpredictability of the regulatory environment in the U.S. — although recent news out of Wyoming and Rhode Island is positive — long-term investors would be wise to consider diversifying into several different companies rather than putting all their cannabis eggs in one basket.

Courtesy image.


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