Will Cannabis Producer HEXO Stock's Rerate Over Time Despite Plunge In Price?

Last week, HEXO Corp. (TSX: HEXO) (NYSE: HEXO) announced the pricing of a previously announced overnight marketed public offering of its 47.46 million units at a price of $2.95 per unit.

The Canadian producer said it plans to utilize the total proceeds of $140 million from the offering to fund the purchase price payable to the Redecan shareholders on the closing of the acquisition and for expenditures related to its U.S. expansion plans.

On Friday, Hexo’s shares were down 28%.

The Analyst

Cantor Fitzgerald’s Pablo Zuanic reaffirmed a “Neutral” rating on the stock, lowering its price target to CA$3.40 from CA$10 to address sectoral derating, increased share count and reduced visibility.

The Investment Thesis

“As a result of this transaction, we calculate the new proforma common share count at …

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