The stock market continued to make modest gains on Friday morning, sending most major benchmarks to new record levels. Enthusiasm about the prospects for continued economic growth have many investors feeling more confident than ever. As of 10:45 a.m. EST, the Dow Jones Industrial Average (DJINDICES:^DJI) had climbed 15 points to 28,972 after having been above 29,000 briefly earlier in the session. The S&P 500 (SNPINDEX:^GSPC) gained 5 points to 3,280, and the Nasdaq Composite (NASDAQINDEX:^IXIC) picked up 27 points to 9,229.
Marijuana stocks have been stuck in reverse for much of the past year, and Aurora Cannabis (NYSE:ACB) just got votes of no confidence from Wall Street analysts that could point to tougher times ahead. Meanwhile, Six Flags Entertainment (NYSE:SIX) is well known for its theme parks, but concerns about how well it could do internationally weighed heavily on the stock today.
Analysts see Aurora dimming
Shares of Aurora Cannabis fell 7% Friday morning, continuing to lose ground after a horrific 2019. Analysts are starting to lose confidence in the cannabis company, and shareholders aren't taking the news well.
The latest dour forecasts came from analysts at two companies. Piper Sandler cut its rating on Aurora from neutral to underweight, slashing its price target by 67% to $1 per share. Analysts there pointed to a combination of balance sheet uncertainty and a tough environment for marijuana companies trying to raise capital as problematic for Aurora over the next couple of years.
Meanwhile, Bank of America also cut its rating on Aurora from neutral to underperform, setting a price target of just over $1. It raised some of the same concerns as Piper Sandler, noting that it's getting harder for the cannabis company to continue meeting financial covenants on its outstanding credit facilities. Having to renegotiate those facilities in the current environment could be especially difficult.
Aurora is still one of the biggest players in cannabis, but from a business perspective, it's facing a lot of unanswered questions. Until things get clearer, it'll be tough for Aurora's stock to rebound from its plunge over the past year.
China hurts Six Flags
Meanwhile, shares of Six Flags Entertainment dropped like a roller coaster, falling 19%. The company issued a warning that raised some big questions about its plans for expansion in the Chinese market.
Six Flags disclosed in a filing with the Securities and Exchange Commission that it has "encountered continued challenges" in its development of theme parks in China. A key partner has defaulted on payment obligations to Six Flags, and as a result, the theme park operator expects no revenue from China and will see negative adjustments and charges related to the business there. If the default isn't taken care of, then Six Flags might see no revenue from China in 2020, either.
Six Flags also pointed to weak performance in its core North American market. Poor season-pass and membership sales weighed on the business, especially over the holidays. That'll lead to lower revenue in the fourth quarter than during the prior-year period.
Six Flags pays a healthy dividend, but today's drop shows some of the vulnerabilities the theme park operator has. If China doesn't pan out as a growth opportunity, then it'll be tough for Six Flags to pick up the slack elsewhere.