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HEXO Corp: Analysts’ Ratings and Price Target

HEXO Corp (HEXO) is a Canada-based cannabis company. Recently, the company announced its fourth-quarter results for the period ending on July 31, 2019. The company’s revenue missed the estimates of the analysts. HEXO’s stock value fell by 20% from the time of the earnings release. Also, the company’s stock is currently traded at $1.79.

HEXO’s financials

HEXO reported $20.5 million in gross revenues for the fourth quarter. This implies an increase of 29% from the third quarter. Also, the company reported net revenues of $15.4 million for the fourth quarter. This implies an increase of 18.5% sequentially. Gross recreational medicine revenue increased to $19 million. This implies an increase of 30% sequentially.

The company reported a revenue of $44.7 million for the fiscal year 2019. As the company’s earnings missed the expectations, it retracted its 2020 fiscal guidance. The company currently hopes to achieve revenue of $400 million in fiscal 2020.

Additionally, the company reported a net loss from operations of $60.7 million in the fourth quarter. This implies a multifold decline from the third quarter. This is mostly due to a rise in operating costs related to expansions. Currently, HEXO management is focused on reporting EBITDA positive by reducing operating expenses.

Analysts recommendations and target price

Currently, 14 analysts cover HEXO stock. The analysts covering the stock grew from 8 last month to 14 this month. Of these 14 analysts, 3 analysts recommend a “buy,” 8 analysts recommend a “hold,” 2 analysts recommend a “sell,” and 1 analyst recommends a “strong sell.”

Canaccord Genuity analysts still maintain a “hold” rating and reduced its target price by 8.33% yesterday to $2.75. Cormark reduced its target price from $4.15 to $2.45. Also, Eight Capital reduced its target price from $3 to $2. PI Financial downgraded to “hold” from “buy.” Also, it reduced its price target from $3.77 to $2.26. The consensus target price of the stock currently stands at $4.

Trend analysis

HEXO stock is currently trading at $1.8. This implies a decline of 53% year-to-date. As the company’s revenue missed the estimates of the analysts, HEXO’s stock value fell by 20% from the time of the earnings release. Also, the stock fell by almost 74% in the last six months. The stock also shows a decline of 16.89% this month.

In recent news, HEXO’s unlicensed inventory is scheduled for destruction. Analysts are disappointed as the company did not disclose the licensing situation in the earnings call. However, the company’s stock value is in the same line from the time of announcing the license situation.

HEXO versus peers

HEXO’s recent earnings report has not been favorable for the company like its peers. The company’s stock value fell by more than 56% in the last three months.

Also, Tilray’s stock (TLRY) tumbled after its earnings release. The company’s stock fell by 5.4% from the time of the earnings release. Canopy Growth (CGC) (WEED) stock fell by 16% after its second-quarter earnings release. Also, Aurora Cannabis (ACB) (ACB.TO) dropped from the estimates of the analysts. The company stock value fell by more than 9% on the day of the earnings release.

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