Major Broker Dealers Are Slashing Price Targets Across The Board For Canadian Licensed Producers

The first week of 2022 has proven to be a challenging period for the overall market as well as the cannabis sector. 

The combination of rising inflation and interest rates has scared many investors and this is a trend that we are closely following. 

During the last month, several broker-dealers that cover the cannabis sector have lowered their respective price targets on leading Canadian Licensed Producers (LPs). Although we have covered this trend before, we find the recent price target changes to be more significant due to the size of the cuts. 

Today, we highlighted 3 high-profile Canadian LPs that have been the subject of price target cuts from broker-dealers so our readers can better understand this trend. We will also provide insight on the amount of upside (or downside) that is implied by the new price targets and believe our readers need to be aware of the trend. 

Has Canopy Growth Lost Its Luster?

Canopy Growth Corporation (TSX: WEED) (Nasdaq: CGC) is one of the best known cannabis companies and has recently been under heavy pressure. Momentum (as measured by RSI) has been trending lower and this is a metric that we continue to closely follow. During the last month, Canopy Growth has fallen more than 20% and we continue to closely monitor price movements. 

During the last two months, the following broker-dealers have changed its price target on Canopy Growth: 

• January 6th – Alliance Global Partners lowered the price target to C$11 from C$18
• December 24th – Bank of America cut its rating to Underweight from Neutral and lowered the price target to C$10 from C$19
• December 19th – Piper Sandler cut its rating to Underweight from Neutral and lowered the price target to C$10 from C$19
• November 17th – Barclays initiates coverage with a Hold rating and a $14 price target

Brokers are Getting Bearish on Organigram

Organigram Holdings Inc. (TSX: OGI) (Nasdaq: OGI) is another Canadian LP that has been the subject of price target cuts from broker-dealers. Last year, the company formed a strategic relationship with British American Tobacco (NYSE: BTI) which included a $100+ million investment. We are favorable on this relationship and will continue to monitor how the story evolves in 2022 and beyond. 

During the last two months, the following broker-dealers have changed its price target on Organigram: 

• January 6th – Alliance Global Partners lowers price target to C$2.25 from C$4
• November 29th – Jefferies lowers price target to C$3.49 from C$3.83
• November 23rd – Canaccord Genuity lowered its price target to C$3 from C$3.50
• November 23rd – Alliance Global Partners lowered its price target to C$3 from C$3.50
• November 23rd – ATB Capital Markets lowered its price target to C$2.65 from C$4.25

Aurora Cannabis Receives Mixed Reviews 

Aurora Cannabis Inc. (TSX: ACB) (Nasdaq: ACB) was once considered to be a leading play on the global cannabis market. During the last two years, the company has been in turmoil and the recent trend has been challenged. Going forward, we are cautiously optimistic with the Canadian LP and believe that 2022 is a make or break year for it. 

During the last two months, the following broker-dealers have changed its price targets on Aurora Cannabis:

• November 12th – MKM Partners raised its price target to C$8 from C$7 
• November 10th – CIBC changed its rating to Neutral from Underperformer and raised its price target to C$9.25 from C$6.5
• November 10th – Canaccord Genuity lowered its price target to C$6 from C$6.5
• November 9th – Cowen and Company raised its price target to C$10 from C$8.50
• November 9th – ATB Capital Markets lowered its price target to C$5.75 from C$6

If you are interested in learning about how broker-dealers are changing price targets and ratings on leading Canadian LPs, please send an email to support@technical420.com with the subject “Canadian LPs Rating and Price Target Changes” to learn more. 

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Michael Berger is Managing Partner of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.

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