Two of Canada’s leading LPs saw their analyst price targets increased while the other decreased

After starting 2019 off on fire, cannabis stocks have cooled off a bit as we approach the summer months. This should not come as a big surprise to investors as we have seen a similar pattern play out the past few years. Are we seeing the ‘Sell in May and Go Away‘ theory in action? That is up to you to decide.

The Canadian cannabis sector continues to be led by the ‘Big 3’ licensed produces (LPs). Canopy Growth, Aurora Cannabis, and Cronos Group sit perched at the top of the mountain but who will be able to maintain their spot?

Let’s take a look at what the industry’s top analysts have to say:

Canopy Growth Corp. (TSX: WEED) (NYSE: CGC)

Aurora Cannabis Inc. (TSX: ACB) (NYSE: ACB)

High-End Price Target: $13.50 CDN

Rating: Speculative Buy

Analyst: Matt Bottomley

Firm: Canaccord Genuity

Current Share Price: $11.71 CDN

Implied Upside: 15.29%

Notes: In early April 2019 Bottomley increased his target on ACB from $13 to $13.50 while maintaining a speculative buy rating on the stock. Recent good news out of Germany in which Aurora was awarded the maximum number of lots for domestic cannabis production in Germany seems to be the catalyst here.

Cronos Group Inc. (TSX: CRON) (NASDAQ: CRON)

High-End Price Target: $22 CDN

Rating: Neutral

Analyst: Jason Zandberg

Firm: PI Financial

Current Share Price: $20.07 CDN

Implied Upside: 9.62%

Notes: Just last week analyst Jason Zandberg of PI Financial lowered his price target on CRON from $24 to $22 while maintaining his Neutral rating. Zandberg cited mixed results in the company’s quarterly earnings as the reason for the decreased price target.

After reviewing what the industry’s top analysts had to say about the big three Canadian LPs it is easy for us to see that Canopy Growth offers the most implied upside at this current point in time. With their proposed acquisition of Acreage Holdings making headlines around the world and the company continuing to fire on all cylinders, it is very likely that Canopy will outperform Aurora and Cronos for the remainder of 2019 and into the foreseeable future.

It is also likely that Aurora will continue to solidify their place as the number two Canadian LP as the company prepares to break ground in Germany and further execute on their global expansion strategy. Aurora has a much larger float than the other two stocks outlined in this article so it will likely take some major catalysts for them to ever challenge Canopy as the king of the LPs.

After surging up the ranks to begin 2019 fueled by the massive $2.4 billion investment by Altria Group (NYSE: MO), Cronos has seen their share price drop over 30% in the past two months. Investors and analysts continue to struggle with Cronos’ valuation so the company will need to make major strides for the remainder for 2019 in order justify their lofty market cap and prove to investors that they belong at the top of the heap.

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