US and Canadian Financial Analysts Abandon Canopy Growth Corporation; Stock Sinks To Record Low
2 min readPublished On: June 15th, 2022By News Team
TORONTO–Canopy Growth, Corp. (TSX: WEED) hit a new low on Monday as the Canadian stock market continued to fall, fueled by underperforming limited partnerships and pessimistic market sentiment owing to inflation and rising interest rates.
In a note, analyst Matt Bottomley of Canaccord Genuity stated: “It’s not that demand is diminishing; the competition is tremendous.”
Canopy had shifted its focus to high-end, high-potency goods in order to become profitable. They also trimmed costs by laying off employees and exiting several overseas markets. But was it too little, too late?
“We feel even this bleak guidance is optimistic,” commented another analyst, Andrew Carter, of Stifel, “and our prognosis does not suggest the company can achieve positive EBITDA with the existing expense structure.”
Canopy announced that company was abandoning its medium-term revenue and cash flow targets set in February of last year.
“Shifting customer preferences, low entry barriers in the Canadian recreational market, and glacial regulatory progress across Canada and the United States make it difficult for us to provide near- to medium-term targets,” said Judy Hong, the company’s CFO.
Analysts predicted a loss of C$63.80 million, according to Refinitiv data.
The amount of money lost as a result of operating losses is far greater than any analyst projected.
Canopy Growth Chief Executive Officer David Klein (CNW Group/Canopy Growth Corporation)
BMO Capital Markets analyst Tamy Chen downgraded Canopy Growth to a “sell” rating and dropped the target price to C$2.50 following the release of the company’s most recent quarterly financial report.
The downgrade is due to the fact that the company’s cost-cutting strategy is unlikely to have a major impact on its bottom line, according to the analyst.
“Every LP will have bad crops from time to time,” she said, “but we have not seen another firm publish a gross margin as low as Canopy’s.”
A few of other brokerages have downgraded the cannabis company to a “sell” recommendation. In a note issued last week, Eight Capital decreased its target price from C$7.00 to C$5.50. Canopy Growth has been rated as a “sell” since May 24. On the same day, Canaccord Genuity Group decreased its target price from C$10.00 to C$6.00.
Canopy Growth isn’t the only one, though. Tilray (TSX: TLRY) traded at an all-time low of $3.10 on Monday. Aurora Cannabis (TSX: ACB) ended the day at C$0.02, up from its all-time low of C$1.58 on Monday.
Newsteam at Highly Capitalized are some of the most experienced writers in cannabis and psychedelics business & finance. We cover capital markets, finance, branding, marketing and everything important in between. Most of all, we follow the money.
Douglas, Isle Of Man - Cannabis extraction and extract have gone through exponential growth in the past decade. After being criminalized for a long time, the world saw and moved towards legalizing cannabis in many ...
GRANTS, N.M. - Bright Green Corporation (NASDAQ: BGXX) (“Bright Green” or “the Company”), one of the very few companies selected by the U.S. government to grow, manufacture, and sell, legally under federal and state laws, ...
DUBLIN - Global Cannabis Testing Market to Reach $2.8 Billion by 2030 In the changed post COVID-19 business landscape, the global market for Cannabis Testing estimated at US$1.1 Billion in the year 2022, is projected to reach ...
DISCLAIMER NOTE: This email should be considered strictly private and confidential. Sender of this email is not a United States Securities Dealer, nor Broker, nor U.S. Investment Adviser. Sender is a Registered Corporation and Consultant, and makes no warranties, nor representations as to the buyer, seller, or transaction. Furthermore, this email includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Read more