HEXO still a BUY for the Desjardins analyst with $12.50 PT

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The Desjardins Group

Today, analyst John Chu of Desjardins Capital Markets has lowered the target price for HEXO shares from $14 to $12.50 following the latest development.

This morning, HEXO issued a report that sales would be lower than expected. They expects $ 14.5M- $ 16.5M and net income for the year to be approximately $ 46.5M- $ 48.5M .

“While we are disappointed with these results, we are making significant changes in our sales and operations strategy.” Over the past quarter, we are re-configuring our operations to focus on high-selling strains and a new sales strategy. that we will know how to improve our performance. “

In addition, St. Louis removes the forecast of $ 400 million for next year.

” Slower than expected store rollouts, a delay in government approval for cannabis derivative products and early signs of pricing pressure are being felt nationally. The delay in retail store openings in our major markets has meant that the access to a majority of the target customers has been limited. Additionally, regulatory uncertainty across the pan-Canadian system and jurisdictional decisions to limit the availability and types of cannabis derivative products have contributed to an increased level of unpredictability. As a result, HEXO is withdrawing its previously issued financial outlook for fiscal year 2020″


Desjardins

Desjardins is still recommending the purchase of Hexo, analyst John Chu from Desjardins Capital Markets, with a target price of $12.50.

“Hexo’s warning and the withdrawal of its forecasts for 2020 highlight the difficulties related to competition from the black market, the limits of distribution networks and the uncertainty surrounding derivatives”


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