Market Overview

Canopy Growth Set To Become Cannabis Sector Leader, Says BofA

Share:
Canopy Growth Set To Become Cannabis Sector Leader, Says BofA

Although the Canadian cannabis market has evolved more slowly than expected, Canopy Growth Corp (NYSE: CGC) has the potential to become a long-term leader in this sector, according to BofA Securities.

The Canopy Growth Analyst

Bryan Spillane reinstated coverage of Canopy Growth with a Buy rating and CA$30 ($21.61) price target. 

The Canopy Growth Thesis

Canopy Growth’s recent developments, like management changes and "right-sizing" of operations, as well as its strong cash and market share position, make the company a good candidate to become a leader in the cannabis sector, Spillane said in a Friday note. (See his track record here.)

A robust balance sheet has allowed Canopy Growth to scale its business in both Canada and abroad faster than its peers, the analyst said. 

While Canopy Growth had initially adopted a “be-first” approach, management now seems to be focusing on “striking a balance between growth, productivity and financial returns,” he said. 

The company has already reduced capacity in Canada, scaling back the organization as well as some international projects, Spillane said. 

While there are some near-term risks for Canopy Growth, like executing the roll-out of derivative product forms in Canada, these are “appropriately reflected in Street estimates and valuation on shares,” the analyst said. 

CGC Price Action

Shares of Canopy Growth were trading 6.38% higher to $19.34 at the time of publication Friday. 

Related Links:

Cannabis Stock Gainers And Losers From May 21, 2020

Seth Rogen's Houseplant Launches THC Beverages In Canada

Courtesy photo. 

Latest Ratings for CGC

DateFirmActionFromTo
Feb 2020Stifel NicolausMaintainsBuy
Jan 2020BMO CapitalUpgradesMarket PerformOutperform
Nov 2019Bank of AmericaUpgradesNeutralBuy

View More Analyst Ratings for CGC
View the Latest Analyst Ratings

 

Related Articles (CGC)

View Comments and Join the Discussion!

Posted-In: BofA Securities Bryan D. SpillaneAnalyst Color Cannabis Price Target Markets Analyst Ratings Best of Benzinga

Cannabis Movers

503 Backend unavailable, connection timeout

Error 503 Backend unavailable, connection timeout

Backend unavailable, connection timeout

Guru Mediation:

Details: cache-wdc5558-WDC 1591337719 4283951771


Varnish cache server