Benzinga | Dec 7, 2021 11:43AM EST

Wells Fargo Sees 12% Upside In Hydrofarm Holdings

* Wells Fargo analyst Chris Carey initiated Hydrofarm Holdings Group Inc (NASDAQ:HYFM) with an Equal Weight rating and a price target of $33 (an upside of 12%).

* The analyst launched coverage of three hydroponics operators in the cannabis industry, which he said has "gone from taboo to mainstream, both on Wall St. and on Main St."

* Carey says the federal illegality of cannabis limits investments for those needing to stay in the bounds of federally legal operators, but there are still opportunities, such as in "tangential sectors" such as hydroponics.

* Hydroponics is "really a market share game," said the analyst, who views Hydrofarm as a hydroponics pure play, which is good when times are good, but a risk when demand is volatile.

* Price Action: HYFM shares are trading higher by 1.55% at $29.45 on the last check Tuesday.