Market Overview

Analyst: Canopy Growth Looks Greener Than It Did 6 Weeks Ago

Analyst: Canopy Growth Looks Greener Than It Did 6 Weeks Ago

Over the past 12 months, Canopy Growth’s (NYSE: CGC) shares have fallen by half. 

The Analyst

Bank of America Merrill Lynch’s Christopher Carey reiterated a Neutral rating on Canopy Growth with a $23 price objective. 

The Thesis

The risk-reward profile for Canopy's second-quarter looks much better than it did six weeks ago, Carey said in a Wednesday note. (See his track record here.) 

Bank of America downgraded the stock Sept. 27. 

The analyst predicts the company will reveal its new CEO when it reports second-quarter results Nov. 14.

That development, together with recently lowered estimates, could form a low bar, he said. 

“Reiterate Neutral, on near-term execution risks and potentially lofty Street estimates, balanced by an industry leading balance sheet.”

The second-quarter consensus sales estimate is CA$102 million ($77.4 million) versus CA$97 million in the prior quarter, Carey said. 

Bank of America is expecting a figure beneath the Street estimate: CA$94 million.

The Street's out-year estimates present a “best case scenario,” the analyst said. 

"While we think that setup has improved for FQ220, we view sustainable upside in Canopy shares as challenging, particularly against a backdrop of Street estimates that we think are too high."

Price Action

Canopy Growth shares were up 0.7% at $20 at the time of publication. 

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Large Option Trader Betting On Canopy Growth Bounce Ahead Of Earnings

Latest Ratings for CGC

Nov 2019UpgradesNeutralBuy
Nov 2019MaintainsBuy
Nov 2019DowngradesBuyHold

View More Analyst Ratings for CGC
View the Latest Analyst Ratings

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