Why This Analyst Just Threw Cold Water on New Age Beverages (NBEV) Stock
Cannabis mania is in full swing, and one stock that is generating a lot of hype is New Age Beverages Corporation (NBEV). Yesterday, NBEV announced it expects to debut its portfolio of cannabidiol (CBD) infused beverages at the North American Convenience Store (NACS) show. Furthermore, according to a report from BNN Bloomberg published Monday, Coca-Cola is closely eyeing the cannabis market and is potentially looking to develop a CBD-infused beverage.
In reaction, NBEV shares shot up 287% this week faster than Jack’s magic bean sparking right into a giant beanstalk.
“NBEV’s market price has significantly exceeded our prior $3 price target, which we derived using a 10-year DCF analysis and comparative valuation, due to a substantial run up in share price that is not based on fundamentals, in our opinion. Therefore, we would not initiate any new positions in the stock at this time,” said Maxim analyst Anthony Vendetti who downgraded the stock from Buy to Hold.
“We believe the recent share price appreciation is not based on fundamentals, but largely due to a combination of the company’s development of a CBD-infused product portfolio, unconfirmed KO acquisition rumors, and the overall euphoria surrounding the cannabis sector. In addition, we remain concerned about the company’s ability to return its brands to growth, especially given the recent inventory shortfalls that may have hurt its relationships with retail accounts. Finally, NBEV’s recent equity raise at $1.28 per share resulted in further dilution to shareholders. Therefore, we are downgrading the stock to Hold and removing our $3 price target,” the analyst added.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Anthony Vendetti has a yearly average return of 16.9% and a 56.7% success rate. Vendetti has a 181.1% average return when recommending NBEV, and is ranked #332 out of 4879 analysts.
Vendetti is the only analyst who’s covered NBEV in the past 12 months.