Market Overview

Bank Of America Remains Bullish On Canopy Growth Despite The 'End Of An Era'

Bank Of America Remains Bullish On Canopy Growth Despite The 'End Of An Era'

Canopy Growth Corp (NYSE: CGC) has parted ways with founder and co-CEO Bruce Linton and this marks an "end of an era," according to Bank of America.

The Analyst

Bank of America's Christopher Carey maintains a Buy rating on Canopy Growth with a $53 price target.

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The Thesis

Canopy's growth from a $200 million company to today's $14 billion valuation was due in part to Linton's ability to remain "ahead of the curve," Carey wrote in a note. His departure from Canopy is a "net negative" for the company's next chapter, which will be run for the time being by Mark Zekulin. He is less of a public figure, but has been with the company since the beginning.

Canopy's priorities are also different today than in the past as management need to operate with a level of financial discipline "that has been lacking," Carey said. Under a new leadership structure, Canopy will likely become a "more rigorous" entity with a "financial positive" focus. It's not yet certain the company will lose its "be-first mentality," which helped it rise to its leadership position today.

Carey said the company needs to explain its long-term investment versus near-term profit dynamics and how it can establish long-term leadership if strategic priorities are changed.

Bottom line, Canopy Growth is still "the most scaled and capitalized" cannabis company in the space.

Price Action

After falling more than 5% early Wednesday morning, Canopy Growth's stock closed the session higher by 2.45% at $41.06 per share.

Related Links:

Canopy Growth's Bruce Linton Out As Co-CEO: 'My Turn Is Over'

Bruce Linton Tells CNBC He Was 'Terminated' From Canopy Growth

Latest Ratings for CGC

Oct 2019DowngradesBuyNeutral
Oct 2019DowngradesHoldUnderperform
Oct 2019MaintainsOverweight

View More Analyst Ratings for CGC
View the Latest Analyst Ratings

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