Cannabis stocks rally anew as analysts cheer latest tie-ups in growing sector – MarketWatch

U.S.-listed shares of Canadian cannabis companies rallied anew Wednesday, as analysts cheered the latest link-ups in the sector and remained bullish on a market expected to grow quickly once Canada fully legalizes the substance on Oct. 17.

Cronos Group Inc. CRON, +11.66% led the charge, climbing another 15% to put its one-month gain at 119%. The Toronto-based company climbed about 13% on Tuesday, after it announced what it called a “landmark partnership” with Boston biotech Ginkgo Bioworks Inc. that will seek to produce specific cannabinoids at scale.

Cannabinoids are specific molecules in marijuana that can produce effects in the human body, with the most commonly known subclasses being Tetrahydrocannabinol, or THC, and cannabidiol, or CBD. Cronois has pledged to fund about $22 million in research and development and issue up to 14.7 million shares to Ginkgo if the partnership meets certain milestones

GMP Equity Research raised its stock price target on Cronos by $7 to $17 on Wednesday, as it increased long-term revenue estimates on expectations of sales of cannabinoids as an active pharmaceutical ingredient to the drug sector.

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“With Ginkgo, Cronos has entered the major leagues in cannabinoid research,” GMP analysts led by Martin Landry wrote in a note, reiterating their buy rating on Cronos.

“Under a scenario where Ginkgo succeeds in producing cannabinoids at scale, this technology could be a game changer to reduce production costs. In addition, it could be a major differentiation factor for Cronos in terms of product offering, being able to offer large quantities of rare cannabinoids in a cost effective manner.”

Elsewhere in the sector, Nanaimo-based Tilray Inc. TLRY, +16.69% , the first full-service weed stock to list

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