Specialty hydroponic and organic garden centers operator GrowGeneration Corp. (NASDAQ: GRWG) recently revealed that it has acquired Horticultural Rep Group (HRG), a specialty marketing and sales organization of horticultural products. The financial terms of the deal have been kept under wraps.
Following the news, shares of the company rose 15% to close at $8.44 on Monday.
Strategic Impact
HRG’s acquisition will allow GrowGeneration to effectively market its products, as HRG represents hundreds of product SKUs for many companies that are popular in the hydroponics market. Further, the company also sources and distributes numerous products across the horticultural and hydroponics industry.
Notably, HRG generated revenues of $10 million in 2021.
Management Commentary
The President of GrowGeneration, Michael Salaman, said, “With this acquisition, GrowGen is strengthening its global product supply chain and adding significant distribution of its growing list of private label products. Keith Harrington is one of the most respected executives and one of the early innovators of the U.S. modern horticultural market. We are excited that he will contribute his multi-decade expertise to the GrowGen team.”
Stock Rating
Recently, Stifel Nicolaus analyst W. Andrew Carter reiterated a Hold rating on the stock. The analyst, however, lowered the price target from $24 to $10, which implies upside potential of 18.5% from current levels.
According to the analyst, the company is likely to report muted results for the fourth quarter and miss revenue estimates.
The Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 3 Buys and 3 Holds. The average GrowGeneration stock prediction of $17.92 implies that the stock has upside potential of 112.3% from current levels. Shares have declined about 81.7% over the past year.
Increased Hedge Fund Trading
TipRanks’ Hedge Fund Trading Activity tool shows that confidence in GrowGeneration is currently Very Negative, as some of the top hedge funds that were active in the last quarter decreased their cumulative holdings by 1.4 million shares.
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