Canopy Growth’s Price Targets Get Slashed After Lackluster Q2 Earnings Print

On Friday, Canopy Growth Corporation (TSX: WEED) (Nasdaq: CGC) reported second quarter financial results which received a negative response from the market. After releasing quarterly results, the stock recorded a double-digit percentage decline on heavy trading volume and we are following price movements from here. 

Following the weak second-quarter earnings report, several broker-dealers lowered price targets and ratings on Canopy Growth which we have highlighted below:

1. Canaccord Genuity’s rating went to Sell from Hold; price target went to C$12 from C$25
2. CIBC’s rating went to Sell from Hold; price target went to C$12 from C$22
3. Cowen and Company lowered its price target to C$16 from C$22
4. Alliance Global Partners lowered its price target to C$18 from C$20
5. Piper Sandler lowered its price target to $11 from $15

When compared to other times that Canopy Growth received price target cuts from broker-dealers, these cuts are much larger from a percentage changed standpoint. In the near-term, we expect the trend to be challenging for the Canadian cannabis company and we will monitor how the market responds to the rating and price target cuts. 

Currently, Canopy Growth is trading above the price target that was issued by Canaccord and CIBC. Going forward, we will monitor how other broker-dealers respond to Friday’s earnings report and will follow the trend to see if some of the firms that lowered its respective price target further lower their price target on Canopy Growth. 

We would not be surprised to see additional broker-dealers respond to the earnings report in a negative manner. While we are cautious with the near term outlook, we are favorable on the strength of Canopy Growth’s balance sheet and consider it to be an important aspect of the long-term opportunity.

Over the next year, we expect Canopy Growth to announce additional investments or acquisitions of strategic United States cannabis assets. We expect the US market to play an important role in the success of the Canadian cannabis company and will monitor how the story evolves from here.

If you are interested in learning more about Canopy Growth’s downgrades and price target cuts, please send an email to support@technical420.com with the subject “Canopy Growth Downgraded” to be added to our distribution list. 

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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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