22nd Century Group (XXII) Sell-Off Creates a Buying Chance, Chardan Capital Markets Says
Chardan Capital Markets reiterated a Buy rating and $8 price target on 22nd Century Group (NYSE: XXII), calling the recent sell-off an attractive entry point.
Analyst James McIlree comments, "XXII is off 26% from recent highs (although still up 150% from our $1.80 initiation) and we believe this represents an attractive entry point. We expect multiple catalysts over the coming months to drive the shares higher and we reiterate our $9 price target. The stock remains our top pick for the year."
He added, "Earlier this month trading moved to the NYSE which should improve liquidity for the shares since they become available for more institutional accounts, margin accounts and for retail brokers to recommend to their clients without burdensome approval letters. Adding options chains also adds to the shares' liquidity."
"From a fundamental standpoint the company announced the sale of excess machinery in an auction earlier this month, generating net proceeds of $640 thousand. We estimate this will result in a pretax gain of $182,000. In addition, 22nd Century’s subsidiary, Goodrich Tobacco, received a federal permit (a TTB permit) to product tobacco products from the Alcohol and Tobacco Tax and Trade Bureau of the U.S. Department of the Treasury. This was part of the dual track process 22nd Century has underway to achieve volume production. The other track was acquiring an MSA (Master settlement agreement) from the National Association of Attorney’s General (NAAG) via the purchase of NASCO. Upon consummation of the NASCO deal 22nd Century will forfeit its TTB permit."
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Shares of 22nd Century Group closed at $4.60 on Friday.