GrowGeneration (NASDAQ:GRWG) wasn't the most popular marijuana company on the market Tuesday following a recommendation cut from an analyst tracking the hydroponics retailer. Alliance Global Partners prognosticator Aaron Grey downshifted his outlook on the shares; he now considers them a neutral from the previous buy.

At the same time, however, he boosted his price target on GrowGeneration stock to $54 per share. Formerly, this stood at $45.

In his research note, Grey wrote that despite the company's recent raise in guidance, its valuation is now full -- hence, the recommendation change to neutral.

Marijuana plants growing under purple LED lights.

Image source: Getty Images.

In contrast to nearly every other marijuana stock, GrowGeneration has been a big hit with investors since mid-2020. The company's two recent quarters have been profitable, while its top line has been growing at very attractive rates. Another factor that sets it apart is that, as a retailer of products for growers, it is not subject to the web of legal restrictions that limit marijuana companies more directly involved in the sale of the drug.

GrowGeneration is also an active and busy acquirer of hydroponic retail assets, a strategy that is quickly positioning it as a force in its still rather small segment. 

With his adjustments, Grey is leaving some room for modest price appreciation despite the neutral recommendation. The new $54 per-share target is 7% above the stock's current level.

Speaking of that, GrowGeneration dipped by 2.4% in trading on Tuesday. This was worse than the essentially flatline performance of the S&P 500 index on the day.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.