Cannabis stocks led higher by Curaleaf after company buys Chicago-based multistate operator

Cannabis stocks were mostly higher Wednesday, with Curaleaf leading the pack after announcing an $875 million stock-and-cash deal that will help it expand into new states, including Illinois.

Aurora Cannabis ACB, +3.77% ACB, +3.63% was also in the news, after its German subsidiary won all three lots to supply Italy with medical cannabis for the next two years, as news site Marijuana Business Daily reported. Aurora was competing with Tilray, Canopy Growth, Wayland and Medicinal Organics Cannabis Australia.

Mattson is taking a bullish long-term view of the new legal sector, while acknowledging some of the teething problems that have surfaced in Canada since it fully legalized last year.Aurora is “one of the most aggressive capacity expansion plays” in the sector, with its aim to become the low-cost provider of premium product, the analyst wrote. Aurora shares were up 3.1%.

The stock is currently trading at a multiple that is similar to bigger rivals in terms of enterprise value to revenue, even though 35% of its revenue comes from food products, which Mattson said does not have the same growth rates as cannabis. “This is an impressive feat considering this was Valens’ second quarter of operations and capacity utilization remains low at ~8% of the recently expanded 425 tonnes,” Macdonell wrote in a note to clients. He reiterated his buy rating on the stock and price target of $10 that is three times its current trading level.

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