March 18, 2019 / 3:28 PM / in a year

BUZZ-Hexo Corp: Cormark upgrades on HIP buy, market gains

** Canadian cannabis producer’s shares up 5.6 pct at C$8.55 following upgrade, PT raise

** Hexo’s Newstrike Brands deal is its first meaningful acquisition and helps expand cultivation platform and incremental distribution in five provinces, Cormark Securities analysts write

** Upgrades to “buy” from “speculative buy”; raises PT from C$7.50 to C$11, a 38.5 pct upside to Friday close

** Estimates HEXO captured 11 pct market share during Q2 2019 on strong growth in Quebec

** HEXO is well capitalized and has a combo of scalable capacity, competitive cost structure and pursues differentiated products with credible partners such as Molson Coors - brokerage

** FY2020 guidance appears aggressive due to several industry-related factors that could act as headwinds - brokerage

** Shares of other pot producers also rise

** All 11 brokerages rate the stock “buy” or higher; median PT C$10

** Including today’s gains, stock up 81.5 pct YTD (Reporting by Shanti S Nair in Bengaluru)

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