Hexo Corp’s shares soared more than 22.2% on Feb. 16 as the cannabis company announced the acquisition of Zenabis Global in an all-stock deal valued at C$235 million.
According to the terms of the transaction, Zenabis shareholders will receive 0.01772 of Hexo shares in exchange for each Zenabis share. Shares of Zenabis Global (ZBISF) closed 18.3% higher on Feb. 16. The stock exchange ratio for the transaction implies a premium of 19% based on a 20-day volume-weighted average price of Zenabis shares and Hexo shares on the Toronto Stock Exchange (TSX) as on Feb. 12.
Hexo’s (HEXO) CEO Sebastien St-Louis said, “Zenabis has built solid relationships and they share HEXO’s vision of bringing exceptional branded cannabis experiences to adults everywhere, in Canada and abroad.”
St-Louis added, “We are proceeding with this transaction because we believe it should be accretive for our shareholders, and it also positions HEXO for accelerated domestic and international growth while supporting near-term requirements for additional licensed capacity. HEXO’s growth strategy includes expanding our global presence, and this acquisition is an important step in that direction.”
Hexo expects the combined company to be among the top three licensed producers when it comes to recreational cannabis sales in Canada. The acquisition will also give Hexo immediate access to the European medical cannabis market. Hexo expects to generate annual synergies of C$20 million within one year following of the closure of the acquisition. (See Hexo Corp stock analysis on TipRanks)
Following the deal announcement, Oppenheimer analyst Rupesh Parikh assigned a Hold rating on the stock. Parikh said, “For some time we have called for consolidation in the Canadian cannabis space. Key highlights of the transaction include: 1) stronger domestic market share; 2) a foothold in Europe; 3) accretive synergies; and 4) a capacity boost to help HEXO sustain growth rates.”
“At this point we are making no changes to our estimates (awaiting deal close). HEXO management has been executing quite well lately, in our view, and we continue to monitor the company's progress in driving toward profitability,” the analyst added.
The rest of the Street is sidelined on the stock with a Hold consensus rating. That’s based on 1 analyst recommending a Buy, 5 analysts suggesting a Hold, and 1 analyst a Sell. The average analyst price target of $3 implies 67.1% downside potential to current levels.
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Shares of Exact Sciences Corporation fell 4.4% In Tuesday’s post-market trading after the cancer screening and diagnostic tests provider reported lower-than-expected 4Q earnings.
Meanwhile, exact Sciences (EXAS) posted a loss per share of $2.79 during the fourth quarter, which was higher than the $0.22 loss per share expected by analysts. Revenue increased about 58% year-on-year to $466.3 million topping analysts’ estimates of $446.22 million.
During the quarter its screening revenue which includes revenue from Cologuard and Biomatrica products rose 9% to $249.7 million. Revenue from COVID-19 testing was $99.1 million. Exact Sciences acquired Base Genomics in 4Q and recorded the acquisition as a $412.6 million charge to R&D expense.
For fiscal 2020, the company generated sales of $1.49 billion, up from the $876.29 million posted in 2019. Diluted loss per share came in at $5.61 versus a loss of $0.64 in the comparable year-ago period.
Exact Sciences’ CEO Kevin Conroy said, “We aim to extend our leadership throughout the cancer continuum and bring additional tests to patients to help improve outcomes.”
Separately, the company also announced the acquisition of clinical genomics testing company Ashion Analytics and a 10-year research collaboration with City of Hope’s Genomics Institute. The transcation is expected to close in the second quarter of 2021. (See Exact Sciences stock analysis on TipRanks)
On Jan. 27, Truist Financial analyst Sandy Draper initiated coverage on the stock with price target of $226 (46.5% upside potential) and a Buy rating. Draper noted that Exact Sciences’ proprietary colorectal cancer screening product has the potential to become the standard for screening in the market.
The analyst also sees Cologuard being recommended to patients aged 45-49 as providing a “huge new market opportunity.”
The rest of the Street has a Strong Buy consensus rating on the stock. That’s based on 5 unanimous Buys. The average analyst price target of $177.40 implies about 15% upside from current levels. Thats after the stock has already run up 57% over the past year.
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Sabre reported lower-than-expected 4Q results as pandemic-led travel restrictions negatively impacted air and hotel bookings. Shares of the software and technology solutions provider to the travel industry closed 2.2% lower on Tuesday.
Sabre (SABR) reported a 4Q adjusted loss of $0.77 per share, which was larger than the $0.66 loss expected by analysts. The bottom-line result also compared unfavorably with the year-ago quarter’s adjusted earnings of $0.16 per share.
Revenues plunged 67% to $314 million year-over-year as global travel restrictions caused significant reductions in air, hotel, and other travel bookings. Moreover, its top-line missed the Street's estimates of $328.6 million. (See Sabre stock analysis on TipRanks)
Following the earnings release, Oppenheimer analyst Jed Kelly reiterated a Hold rating on the stock. In a note to investors, Kelly wrote, “We believe recent global travel agency wins and an ongoing cloud migration are better positioning SABR to scale long-term travel technology trends. However, COVID-19 is severely impacting travel demand and creating structural challenges in forecasting earnings. Therefore, we wait for the industry to stabilize and earnings visibility to improve before recommending shares.”
The Street remains sidelined on the stock with a Hold consensus rating based on 2 Holds, 1 Buy and 1 Sell. The average analyst price target of $11.33 implies downside potential of about 1.8% to current levels. Shares are down about 47.6% over the past year.
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