It’s been a difficult few months for the cannabis industry. Many cannabis companies that were doing well lost some of these early gains, including Hexo (NYSE:HEXO). Hexo stock seemed to be gaining quite a bit of ground until mid-April. The company’s shares have lost more than 80% of their value since.
And Hexo’s shares fell yet again in June after the company released disappointing third-quarter earnings results. However, Hexo stock did get a bit of a reprieve last week. The company’s shares rose more than 10% after receiving a ‘buy’ rating from MKM Partners.
Like other cannabis companies, many of the challenges Hexo is facing are growing pains due to entering an emerging market. The question is, which cannabis companies will make it through and actually become profitable? Here are three things you need to know about Hexo stock.
Analysts Have Mixed Views on Hexo Stock
There doesn’t seem to be much of a middle ground when it comes to cannabis companies. And this certainly seems to be the case when it comes to Hexo’s long-term profitability.
Analysts were particularly bearish about Hexo stock price after the most recent earnings report. CIBC and Oppenheimer both downgraded the company. But Beacon Securities analyst Russell Stanley has a more positive view of Hexo, saying the stock is currently undervalued.
There are currently 15 analysts covering Hexo and eight of them give the company a ‘buy’ rating. Three give the company a ‘hold’ rating and one recommends selling the stock.
HEXO is Forming Partnership With Other Companies
Thanks to a partnership with Molson Coors (NYSE:TAP), Hexo should definitely benefit from the next round of legalizations in Canada. The company plans to begin selling a variety of non-alcoholic cannabis-infused beverages in Canada by the end of the year.
Hexo also acquired Newstrike Brands and gained over 1.31 million square feet in grow space. And the company also formed a two-year partnership with Valen GroWorks. These kinds of partnerships could be very profitable for the company and give it an edge in the coming years.
Management Still Believes It Can Hit Fourth-Quarter Goals
It’s unclear when Hexo’s fourth-quarter earnings will be released, though it should be fairly soon. Many analysts are waiting for the fourth-quarter earnings report before making any suggestions when it comes to the stock.
Wall Street is expecting the company’s revenue to reach CAD $59.6 million. Analysts are also expecting the company to lose 17 cents CAD per share. And in spite of the recent miss, management said it expects to hit its fourth-quarter numbers. And the company expects its production to reach 108,000 kilograms.
Ultimately, it’s probably best to wait and see when it comes to Hexo stock. This next earnings report will reveal whether the company is able to deliver on its promises.
As of this writing, Jamie Johnson did not hold a position in any of the aforementioned securities.