MedMen upgraded at Cantor; says “momentum is shifting” for company • 2:07 PM
Cantor Fitzgerald has upgraded MedMen Enterprises (OTCQB:MMNFF +32.5%) after Tilray (TLRY +5.6%) announced on Tuesday that it acquired a majority of convertible notes giving it a significant equity position in the former subject to federal legalization of cannabis.
“Momentum is shifting for MedMen,” the analyst Pablo Zuanic wrote, citing a range of factors, including the Tilray deal and $100M equity investment announced by the company at the same time yesterday.
Zuanic upped his recommendation to neutral from buy with the 12-month price target implying a premium of ~11.1% to the previous close.
However, “we would not expect the MedMen valuation to double following this deal,” the analyst added, arguing that U.S. MSOs such as Acreage Holdings (OTCQX:ACRHF +3.2%) with transactions contingent on U.S. legalization of cannabis look to trade at sharp discounts to their contingent offer prices.
Meanwhile, even after the deal, Cantor maintained the overweight rating and $19 price target on Tilray (NASDAQ:TLRY) to imply a premium of ~44.8% to the last close.
Commenting on the purchase of notes, Zuanic wrote: “This deal cannot be analyzed in isolation,” drawing parallels with Sweetwater Brewing which was eventually acquired by Aphria in 2020.
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