Investing.com - Shares of Cronos Group (TSX:CRON) (NASDAQ:CRON)shot up Wednesday on news that Bank of America Merrill Lynch (NYSE:BAC) issued a double upgrade on the Canadian cannabis company.
Shares gained 12.88% on the Nasdaq exchange at the open, hitting US$16.27, and 12.6% on the Toronto Stock Exchange, spiking at C$21.77. Shares levelled out at US$15.78 and C$21.19, respectively, by early afternoon.
The Merrill Lynch report upgraded Cronos to a buy rating from its previous underperform, raising the price target to $27 from $13, which represents an 87.2% increase. Cronos closed Tuesday at US$14.42 and C$19.33.
The upgrade came on the heels of Cronos Group CEO Mike Gorenstein making a public statement in New York on Tuesday saying the company would be aggressive is the U.S. CBD market.
Last month, Cronos reported $6.5 million in revenue for the three-month period ended March 31. Although this figure was a 15% gain compared with the previous quarter, it was below analysts' estimates. The increase in revenue was driven mainly by an increase in CBD oil sales, the company said in a statement.
The revenue from CBD oil, valued for its therapeutic properties, represented 23% of net product revenue in the first quarter of 2019. In the first quarter of 2018, it was only 9% of revenue.
Last month Cronos also announced the opening of Cronos Device Labs, a research facility in Israel to develop vaporized products designed for cannabinoid applications. The announcement builds on the C$2.4-billion deal with U.S. cigarette maker Altria Group (NYSE:MO , which bought a 45% stake in Cronos.