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Sundial Growers Could Plunge by 55% to Just $0.65 a Share, Warns Analyst

By Rich Duprey - Mar 19, 2021 at 11:40AM

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But there is still hope for the marijuana producer to exceed expectations.

Shares of Sundial Growers (SNDL -5.31%) may be down by 63% from where they peaked after the massive and rapid run-up they experienced earlier this year, but one analyst says even the $1.46 price they closed at Thursday is way too high.

Canaccord Genuity analyst Shaan Mir says the marijuana producer doesn't deserve to be trading above $0.65 per share, and he downgraded the stock to sell from the hold rating he had only just reiterated on Monday. If the stock drops to that level, it would amount to a 55% haircut from Thursday's final price.

Marijuana leaves and muffins

Image source: Getty Images.

Sundial delivered its fourth-quarter report Thursday and missed analysts' expectations on revenues, though for the full year, the amount of cannabis it sold increased by 36% to 23,500 kilogram equivalents. Moreover, its branded cannabis sales accounted for 75% of all cannabis sales, a huge gain from the 20% they represented a year ago.

It's not all bad news for Sundial on Wall Street. Mir actually raised his price target on the stock from $0.40, and Cantor Fitzgerald analyst Pablo Zuanic lifted his price target from $1.15 per share to $1.40 per share, an indication that he thinks the pot grower is trading close to fair value at its current level.

Less than two weeks ago, Zuanic initiated coverage on Sundial with a neutral rating, but expressed his belief that the money it raised in a stock offering, while also converting warrants and debt, "puts the company in a good position to acquire smaller companies" in Canada and elsewhere that could help it grow.

Sundial Growers stock has been volatile, but last year, it was the worst-performing stock on the market.

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