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Earnings preview: ‘Joint’ venture with Altria to help Cronos Group in Q1

Come Thursday and Cronos Group (NASDAQ: CRON) officially kicks off another season of cannabis stock earnings. The Toronto-based marijuana firm is scheduled to report first-quarter financial results on May 9, before the regular trading hours.

Analysts have projected quarterly revenues of $4.9 million, more-than-double of what it reported during the same period last year. However, due to the increase in costs associated with research and development as well as higher consulting fees, the company is expected to report a loss of 3 cents per share in Q1.

Cannabis Stocks- Performance Comparison

During the last reported quarter, ret revenues had soared 248% to hit C$5.6 million, on higher shipments to the Canadian adult-use market and growth in cannabis oil sales. Investors will be expecting to see the strength in cannabis oil and adult-use market to continue into the first quarter.

CRON is one of the pot stocks that has been extremely rewarding to its loyal investors. The stock has given a staggering 182% returns in the trailing 52 weeks, even though it has seen a fair share of fluctuations. Since the beginning of this year, the stock has climbed 40%.

Cronos Group (CRON) Quarterly Revenue Trend Infographic

Analysts also remain bullish on the stock, which has a 12-month average price target of $21.50, at 36% upside from the last close.

READ: THE QUESTION EVERY POT INVESTOR ASKS HIMSELF – AURORA CANNABIS OR HEXO?

The bull thesis is built on the $1.8 billion equity investment made into the pot firm by cigarette maker Altria Group (NYSE: MO). With the investment, Altria holds a 45% stake in Cronos, with additional warrants to increase holding to up to 55%. Many market watchers predict Altria’s gradual acquisition of the entire company, for both the companies to build a powerful and diversified portfolio.

As the deal with Altria Group was closed during the last quarter, investors will be looking at the financial implications of the collaboration. Expect the management to talk in detail during the earnings conference call on how it plans to utilize the massive investment from Altria. The market expects the Canadian firm to use up the cash for its international expansion plans.

 

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