Shares of Cronos Group soared more than 15 percent on May 5 after the Canadian cannabis company announced it plans to launch cannabidiol (CBD) in the United States within the next six to 12 months.
Following the announcement, Bank of America Merrill Lynch gave the stock a double upgrade—from “under-perform” to “buy”, with analyst Christopher Carey raising his price target to US$20 a share—nearly 40 percent above where shares settled on May 4.
Wall Street has postulated that the CBD market, currently worth $1 billion, could increase to as much as $16 billion by 2025.
In March, Cronos closed a deal with Altria Group, allowing Cronos access to Altria’s domestic farmer network, positioning the company to source hemp locally. Cronos will also be able to leverage Altria’s distribution arm, which includes 230,000 retail locations.