Weed Stock Takes A Hit After Downgrade

Eight Capital has concerns about TLRY's valuation

by Patrick Martin

Published on Oct 11, 2018 at 9:19 AM

Tilray Inc (NASDAQ:TLRY) is 2.2% lower in electronic trading, after Eight Capital downgraded the cannabis stock to "neutral" from "buy," expressing concern over the company's valuation. While the brokerage firm did boost its price target to $70 from $32,  this still stands at a sharp discount to last night's close at $136.80.

The cannabis stock craze has taken Wall Street by storm in the past two months, and Tilray stock has been a big part of that, ballooning up to $300 on Sept. 19, compared to its July 18 initial public offering (IPO) price of $17 per share. The shares have shed more than half their value since those September highs to trade just above their newly formed 30-day moving average. 

But there is some underlying skepticism surrounding the weed stock. Short interest has more than doubled since the Aug. 15 reporting period to 3.64 million shares. In addition, two of the three analysts covering Tilray rate it a tepid "hold," while the average 12-month price target of $102 is a 25.4% discount to last night's close.

In the options pits, the October 50 put is home to peak open interest, and data from Trade-Alert points to a mixture of buy-to-open and sell-to-open activity at this deep out-of-the-money strike. The October 150 call has also been popular, where it looks like mostly buy-to-open activity. Both of these front-month options expire at the close next Friday, Oct. 19 -- two days after Canada legalizes recreational weed.

SAGE Therapeutics Stock Hot Ahead of Earnings
The drug name is scheduled to report on Tuesday
Bear Signal Flashing for This Healthcare Stock Before Earnings
At least four analysts have issued price-target cuts on the stock this week
Signal Says This Retail Stock's on Sale
The shares pulled back this week on news of a Levi Strauss IPO
START YOUR DAY SMARTER.

Get Schaeffer's pre-market news bulletin every morning before the bell rings.
It's free to sign up.


Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


How to Predict Volatility Based on Earnings
A free tool can help traders bank big during the upcoming earnings season.
3 of Today's Worst Nasdaq Stocks
The stocks are sitting out today's rally in the broader equities market
2019 Rally Continues for Stock Market
The Nasdaq is eyeing its longest weekly win streak since 2016
How to Predict Volatility Based on Earnings
A free tool can help traders bank big during the upcoming earnings season.