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Pyxus Continues Surge After Citron Gives The Cannabis Stock A $65 Price Target

October 11, 2018 2:33 pm
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Shares of Pyxus International Inc. (NYSE:PYX) have ripped higher following its entrance into the widely-sought cannabis market.

What Happened

Last month, the former Alliance One International pivoted to the cannabis market. The company has since obtained majority stakes in two Canadian cannabis producers and has received its cultivation license. Following in these footsteps, there was a report Wednesday that Marlboro maker Altria Group Inc. (NYSE:MO) recently expressed interest in Aphria Inc. (OTC:APHQF).

On Thursday, Citron Research slapped a $65 "short-term" price target on Pyxus, saying the company has the most to gain in the "maturation of legacy tobacco" with its defined plan and management in cannabis.

Why It’s Important

According to Citron Research, the company’s name change represented a transition from traditional tobacco production to a revised legal strategy focused on cannabis and hemp production.

Pyxus’s legacy as a tobacco business is worth $500 million, Citron said, whereas the cannabis opportunity only amounts to $150 million.

“Given yesterday’s [Altria-Aphria] news, this makes the risk/reward for Pyxus very compelling especially as Altria gets involved with Aphria formally at a $5 billion valuation or you can instead by this call option in Pyxus," Citron wrote in a note.

What’s Next

Because of its relationships with farmers on a global scale, as well as its revised cannabis focused business model, Citron see no execution risk.

Pyxus shares were up 6.5 percent to $42.78 at time of publication Thursday.

Related Links:

Analyst On Cannabis Stocks: You Have To Be Careful With Valuations

Cowen Dives Into The Cannabis Industry: 'Large Market Opportunities'