Cannabis stocks rose Wednesday on day two, supported by a historic Congressional bill to lift the federal ban on weeds, as well as Curaleaf's strong growth after it posted narrower-than-expected losses in the third quarter.
Curaleaf shares in the USA
Curlf + 16.27%
CURA, + 16.58%
The last time they grew by 15%, as investors dismissed lost revenue.
A Massachusetts-based company announced a loss of $ 6.8 million. The United States, or a penny per share, against losses of $ 33.7 million. US, or 9 cents per share, compared with the same period last year. Revenues rose to $ 61.8 million from $ 21.4 million. Analysts polled by FactSet expected a loss of 2 cents per share on revenue of $ 63.6 million.
GMP analyst Robert Fagan, who estimates the purchase of stocks, said the numbers "are pretty much in line with our relatively high expectations." Revenue was below his estimate of 67 million dollars.
He noted the positive aspects, including good cost control, consistent sales growth and the fact that concerns over vaping had only a slight effect on Select sales for the quarter. In May, the company acquired the Select brand for 1.27 billion CS ($ 954.7 million).
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MKM analyst Bill Kirk raised his fair value estimate to C $ 8 from C $ 6, but was stuck with his neutral stock rating.
“Admittedly, after weak earnings reports for most sectors, it’s nice to use positive numbers to talk about Curaleaf’s profitability,” the analyst writes in a note. "However, we still cannot come to an assessment."
Wednesday's mood improved after the House’s Judicial Committee voted to pass the Reinvestment and Empowerment of Marijuana Act (MORE), which seeks to eliminate the federal ban on cannabis and lift past sentences.
To read: The analyst says Aurora Cannabis shares have the most difficult day in five years: “It would be fair for investors not to believe them”
The bill, introduced by committee chairman Jerrold Nadler, a New York Democrat, was passed on Wednesday with 24 votes in opposition.
“The Senate will take its time, but then the Senate always does it,” Nadler said at a press conference on Tuesday to introduce the bill. He also sought to sound optimistic before Wednesday’s markup session for the bill: “Energy and political pressure from various states are growing rapidly. The Senate is also prone to this. We will do it ".
Also read: The House of Representatives passes a bill whose goal is to legalize marijuana, but the chief democrat admits that "the Senate will take its time."
Harvest Health & Recreation Inc. News
HRVSF, + 5.72%
HARV, + 5.31%
became the last cannabis company to cut a previously agreed deal, its plan to acquire cannabis licenses in Pennsylvania, Delaware, New Jersey and Maryland from CannaPharmacy Inc. for a transaction originally valued at $ 88 million in cash.
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Instead, the companies agreed that Harvest Health would acquire Franklin Labs LLC, a division of CannaPharmacy, for $ 26 million, which would be split between $ 15 million in cash and a $ 11 million bill.
Harvest chief executive Jason Vedadi said the new terms will help the company boost its revenue and profitability goals.
Cannabis shares are still experiencing a period of decline after a deep fall in stock prices. Many companies are reviewing the terms of the transaction, cutting costs and considering selling assets, as the legal market is developing more slowly than expected and companies continue to report losses.
Harvest announced this because in the third quarter, losses totaled $ 39.1 million, or 14 cents per share, more than the loss of $ 453,000 recorded in the previous year. The company did not offer the number of losses per share for the previous year. Revenues rose to $ 33.2 million from $ 11.2 million. Too few FactSet ratings to offer reliable consensus.
Similarly, Neptune Wellness Solutions Inc.
NEPT, + 0.00%
NEPT, + 0.18%
stated Wednesday that a mutual agreement had been reached with Canopy Growth Corp.
CGC + 16.25%
WEED + 15.95%
amend and revise its cannabis processing agreement. The parties agreed to change the processing schedule for the volumes transferred by Canopy to Neptune and to revoke some of the preferential rights granted to Canopy with respect to the capacity and price of Neptune.
“Starting on June 30, 2020, volumes and prices will be agreed between the two parties based on market conditions,” Neptune said in a statement. The three-year term of the transaction remains unchanged. Neptune shares in the US fell 3.7%, while Canopy rose 12%.
Elsewhere in the sector, Tilray
TLRY, + 5.21%
up 2.2%, Aphria Inc.
APHA, + 4.99%
APHA, + 5.28%
grew 3.1% and cronos
CRON, + 2.84%
CRON, + 2.92%
rose by 1.8%.
SHEET, + 6.71%
ALEPH, + 4.41%
up 9.8%, Hexo
HEXO, + 5.49%
HEXO, + 4.08%
grew by 5.9% and organigram
OIG + 6.47%
increased by 5.6%.
MMNFF, + 5.88%
grew by 5.2%. Gw pharma
decreased by 3.0%.
ETFMG Alternative ETF Harvest
MJ + 3.25%
increased by 2.1%, while 25 of the 36 components traded higher. ETF Life Sciences Marijuana Horizons
HMMJ, + 5.54%
grew by 6.5%, while 42 of 54 of its shares rose.
S & P 500
down 0.8% and the Dow Jones Industrial Average
decreased by 232 points, or 0.8%.
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