GrowGeneration Corp. (GRWG) shares rose more than 3% during Tuesday's session after Oppenheimer initiated coverage at Outperform with a price target of $15.00 per share over the next 12 to 18 months. Analyst Brian Nagel believes that the early-stage retail chain is well positioned to benefit from the rapidly growing market for hydroponic and organic gardening supplies.
Last week, Alliance Global Partners reiterated its Buy rating on GrowGeneration shares and raised its price target from $8 to $10 per share. Analyst Aaron Grey raised his sales estimates from its existing store base and e-commerce division in 2020 while citing a recent equity raise and strong cash position as a growth catalyst. Grey sees the company as a strong play on cannabis amid COVID-19 uncertainty.
In June, GrowGeneration raised about $42 million in an offering of 7.5 million shares at $5.60 per share. Management plans to use the proceeds to expand its network of hydroponic and garden centers through organic growth and acquisitions, as well as for general corporate purposes.
From a technical standpoint, the stock briefly broke out from trendline resistance toward fresh reaction highs. The relative strength index (RSI) remains in neutral territory with a reading of 55.73, but the moving average convergence divergence (MACD) could see a near-term bullish crossover. These indicators suggest that the stock has more room to run and reverse its intermediate-term trend.
Traders should watch for a close above trendline resistance during Tuesday's session and a potential move to retest its prior highs of $7.82 or trendline resistance at around $8.00 over the coming sessions. If the stock moves lower, traders should watch for support near the 50-day moving average at $6.37 or the 200-day moving average at $4.86, although that scenario appears less likely to occur.
The author holds no position in the stock(s) mentioned except through passively managed index funds.