Scotts Miracle-Gro’s cannabis play boosts stock price

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Marijuana appears to be lifting Scotts Miracle-Gro’s stocks to new highs.

On Thursday, a day after the Ohio-based lawn care giant announced that it had shelled out $40 million to buy Botanicare, an Arizona-based provider of marijuana nutrient and hydroponics products, JP Morgan stock analyst Jeffrey Zekauskas upgraded his outlook for the company’s stock by raising its target price by more than 20%, to $85 from $70, according to Barron’s. He also upgraded the stock to “overweight” from “neutral.”

“The hydroponics market taps into marijuana demand and the company now has a growth option that we think an investor is able to capture for about the price of the traditional business,” Zekauskas said, according to Barron’s.

Soon after Scotts’ stock was upgraded, it hit its all-time highest price, $80.14, Barron’s reported. On Friday, the stock closed at $79.56 on the New York Stock Exchange.

Zekauskas estimates that Scotts has about 50% of the nation’s lawn care product market share, even though sales have been subpar in recent years. Scott’s foray into hydroponics, however, will help the company’s long-term prospects, he predicted.

Earlier this year, Scotts bought Gavita, a European company that specializes in grow lighting and hardware, and has also invested in other cannabis-related companies.