Bank of America Merrill Lynch Halves CannTrust Price Target to US$3.50

CannTrust Holdings (TSX: TRST) (NYSE:CTST) has begun to see fallout from this mornings announcement that it had been growing cannabis illegally in unlicensed grow rooms at its Pelham, Ontario Facility.

While the share price continues to suffer, analysts have begun to downgrade the equity as a result of their actions. Bank of America Merrill Lynch has downgraded their price target from US$7.00 to that of US$3.50 as a result of the public relations nightmare. They also changed their rating from “Buy” to “Underperform”.

Due to uncertainty on go-forward financials, exacerbated by likely diminishing investor confidence, we see shares remaining weak

Christopher Carey, Analyst

The downgrade is noteworthy considering Bank of America was one of the lead book-running agents for CannTrust’s recent US$170 million financial raise that closed at the beginning of May. The raise was associated with a base shelf prospectus filed March 19, 2019, a time during which the illegal activity was occurring.

BofA had reaffirmed their price target on CannTrust just a few weeks ago, stating that the firms assets were “under appreciated” by investors.

CannTrust is currently trading at US$3.90, down 21.05% on the day following this mornings news.


Information for this briefing was found via BNN Bloomberg and CannTrust Holdings. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Jay

As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive's stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.