Shares of Quebec, Canada-based
medical cannabis company Hexo Corp. fell 3.4% in premarket trade
Tuesday, after Oppenheimer downgraded to stock to perform from
outperform and said it sees greater gross margin pressure than
expected when it first initiated coverage of the stock in February.
"With our updated forecasts and incorporating Newstrike, we now
view shares as more fairly valued," analyst Rupesh Parikh wrote in
a note to clients. Hexo acquired Newstrike Brands in March in an
all-stock deal valued at about C$263 million ($197 million). He
noted the stock's 63% year-to-date gain, which compares with an 18%
rise in the S&P 500 and is well ahead of some of the company's
peers. "Although we are stepping to the sidelines, we still see
many positives to the HEXO story longer term and believe the name
should remain on the radar for investors," said Pariksh.