Tilray Inc (NASDAQ: TLRY) saw plenty of action today despite widespread reports that its “biggest bull” had downgraded the price target on the equity. Cowen & Co had cut their price target significantly for the equity from $150 to $60 – less than half the prior target. Cowen left the equity with a rating of “outperform” despite the significant price target cut.
While the price target cut from one of the biggest cheerleaders for the firm is significant, the market appears to have reacted in a different manner. Despite hitting a new 52 week low this morning, the equity has rallied on apparent rumours that have captured the imagination of traders hoping for a fall rally in the potstocks sector.
Tilray is rumoured to be in talks with a large tobacco firm that is anticipated to take a significant stake in the Canadian licensed producer. However, the original source of the rumour is unclear – and based on the recent price slash by Cowen and other analysts, it may have been created as a means for a large investor to get out with minimal losses.
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In terms of potential suitors from big tobacco, of the “big five,” two are already locked up with respect to the cannabis market. Philip Morris International, whom is to likely remarry Altria as announced last week, currently holds a significant portion of Cronos – 45% to be exact, with convertibles in place to take that percentage up to 55%. Imperial Brands, as recently announced, also stepped into the cannabis market place taking a 19.9% stake in Auxly Cannabis Group. This then leaves British American Tobacco, Japan Tobacco International, and China Tobacco as the biggest tobacco operators yet to take their own position within the cannabis sector.
Tilray had soared over 20% off the days lows with the rumour, however it has since given back some of those gains. A large short interest at roughly 28% of the current float is likely partially to blame for the large rise in the share price following today’s rumour.
Tilray is currently trading at $30.48 on the Nasdaq, up 18.72% on the day.
Information for this briefing was found via Sedar and Tilray. 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.
