Acreage Holdings stock down 9.7%

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Alliance Global Partners starts coverage of four cannabis stocks with buy ratings

Alliance Global Partners initiated coverage of four cannabis companies on Thursday with analyst Aaron Grey assigning a buy rating to all four stocks, namely Acreage Holdings Inc. , Village Farms International Inc. , Green Thumb Industries Inc. and GrowGeneration Corp. . The analyst assigned a $15 price target to Acreage Holdings, almost double its current price of $8.02. “We look for the opening of new stores, build-out of its wholesale business and integration of Form Factory to drive top-line trends going forward (and look for the company to become profitable in 2H2),” Grey wrote in a note to clients. “In addition to the fundamentals, we view the company as attractively priced given it trades 50% below the implied price from the WEED deal -as we see a high likelihood of the STATES Act passing over the 7.5yr period (and acting as a trigger event for the acquisition),” he said, referring to the agreement with market leader, Canada’s Canopy Growth Corp. , that gives that company the right to buy Acreage as soon as cannabis laws in the U.S. have been reformed. The analyst assigned a C$23 ($17.26) stock price target to Green Thumb. “We like management’s focused strategy on executing in markets where the company believes it has a strategic advantage, as demonstrated by its strong positioning in markets such as PA and NV. In addition to strong top-line trends, the business model has now inflected to profitability, which margins we expect to expand as the company scales the business.” Grey placed an $8 price target on GrowGeneration, which he views as an attractive ancillary play in the industry as a hydroponics retailer. He placed a C$26 price target on Village Farms, describing it as an attractive investment opportunity as a leading cultivator in the Canadian market via its joint venture Pure SunFarms. Acreage shares were last down 1.9%, Village Farms was up 0.3%, Green Thumb Industries was up 5% and GrowGeneration was up 0.2%. The ETFMG Alternative Harvest ETF was down 1%, while the S&P 500 was up 0.5%.

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