Bear Note Pushes Cronos Group Stock Lower

The analyst also started with a $13 price target -- nearly an 18% discount to last night's close

Deputy Editor
Apr 17, 2019 at 2:01 PM
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While several pot stocks have gotten a serious boost on BofA-Merrill Lynch's latest note, sector peer Cronos Group Inc (NASDAQ:CRON) has not fared so well. The analyst just initiated coverage with an "underperform" rating and a $13 price target -- a 17.7% discount to yesterday's close. The broker said it was uncomfortable with the company's current valuation. The stock has struggled to stay atop breakeven in response, down 0.2% at $15.75, at last check.

While CRON is still up over 50% year-to-date, its seen a considerable pullback from its all-time high of $25.10 in early February. The equity has lost almost 38% since this spike, and is pacing for its worst month since October of last year. Plus, Cronos stock just dipped beneath its 100-day moving average after five months well above the trendline. 

CRON Chart Apr 17

Cronos might see even more headwinds on the charts, should analysts follow BofA-Merrill Lynch's lead. While CRON currently has six "hold" or worse ratings, two analysts still see it as a "strong buy." The consensus 12-month price target of $16.67, however, holds only a 5.4% premium to current levels.

Options traders have been wary about the pot stock, too. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) CRON sports a 0.79 50-day put/call volume ratio that sits in the 96th annual percentile of its annual range. This hints at a much healthier appetite for bearish bets, of late.

 


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