In times of regulatory uncertainty, inflation and stock market volatility, defining an investment strategy can be a wicked problem. Estimating the future of how cannabis stocks can profit from market trends requires experience, a holistic perspective, good information and an extensive network of personal relationships in the industry.
Fortunately, investors attending the upcoming Benzinga Cannabis Capital Conference in Chicago on Sept. 13-14 will have the chance to interact with the most important analyst and other researchers in the industry.
The most important analyst? That would be Vivien Azer, managing director and senior research analyst who specializes in beverages, tobacco and the cannabis sector at Cowen & Co. In 2014, Azer became the first senior Wall Street analyst to cover the emerging cannabis sector.
Prior to joining Cowen, a diversified financial services firm, Azer, who holds an MBA from NYU’s Stern School of Business, spent over nine years at Citi covering consumer staples.
Key Market Drivers: Price Drops, ‘COVID Comps’ and Supply-Side Issues
In a May interview with Yahoo Finance, Azer referred to the drop in prices of Canadian cannabis stocks, which she defined as a combination of underlying fundamentals, as well as a lack of regulatory change.
“We’ve got some sluggish fundamentals as well. We can see in our proprietary data scrapes that the COVID comps have been quite tough. There was certainly a lot of stimulus in the United States. There was incremental consumption opportunities during the pandemic, certainly in the first year of it. So, in the first quarter of 2022, we are still lapping some stay-at-home comps from last year,” Azer said.
In terms of pricing, Azer noted that at least in part, the current drop in prices constitutes a resetting of the regulatory expectations, as federal legalization might not happen in the near future.
“I think we’re starting to see that from the operators. The messaging out of 1Q ’22 earnings season, I think, appropriately tempered some of the enthusiasm that some of the CEOs had been expressing around the potential for regulatory change.”
She referred to the problem of over-supply in wholesale pricing. “There were a lot of flowers that were planted in legal states in 2021. And when that got harvested in October, we went into an oversupply situation. What’s interesting is that with that wholesale price deflation, that is translating to lower prices at retail. And that is driving volumes higher.
“Consumers are responding to that lower pricing, in particular, against a much more inflationary backdrop for the rest of that consumer’s basket. And so, we are continuing to see year over year growth in foot traffic, despite declines in pricing.”
Join us in Chicago and meet Vivien Azer in person. Learn more about the evolution of nascent high-growth cannabis markets as MSOs leverage scale and vertical integration; consumer behavior post-COVID and post-stimulus in a deflationary cannabis market and the continued migration from the illicit market into legal channels. All this and more from the pioneering cannabis analyst, Vivien Azer. Bring your own questions and concerns to the world’s largest and most successful cannabis investing and finance event on Sept. 13-14 at the Palmer House Hotel in Chicago. Get your tickets HERE.
Image courtesy of Cowen & Co.
Image and article originally from www.benzinga.com. Read the original article here.