Scotts Miracle-Gro (SMG) - Get Report shares bloomed Thursday after Truist Securities raised its price target on the lawn and garden products company to $250 from $180 on potential cannabis reform from a Democratic-Party-controlled Washington and continued coronavirus restrictions that will keep consumers at home.
Shares of the Marysville, Ohio, company at last check were up 4.3% to $224.16.
Analyst Bill Chappell, who keeps a buy rating on the company, said in a note to investors that while he didn't see national legislation on the horizon, "improved banking laws and regulations will enable the legal cannabis growers to accelerate hydroponics purchases" and benefit Scott's Hawthorne unit.
Cannabis stocks climbed Wednesday following the Georgia runoff elections, which gave the Democrats a majority in the U.S. Senate.
Democrats more broadly are also expected to support reforming cannabis laws.
President-elect Joe Biden stated during the campaign that his administration would pursue cannabis decriminalization and seek expungements for people with cannabis-related convictions.
"The election results have created an even stronger environment for cannabis investing, and there is significant momentum behind the industry as domestic and global catalysts continuously fall into place," Sam Masucci, CEO of ETF Managers Group, the issuer of the MJ ETF, said in a statement.
In addition, Chappell said Scotts should benefit from further coronavirus restrictions, which will keep consumers in their homes and ensure a strong lawn and gardening season.
The analyst said that the firm's survey work "indicates that a high majority of the new entrants to the category in FY20 enjoyed gardening and will continue to garden for the foreseeable future."