Major Canadian Licensed Producers Are Set To Report Earnings

Earnings season is heating up for the cannabis sector and we hope to see a trend reversal over the next few weeks.

Canadian Licensed Producers (LPs) have come under additional pressure after a few leading operators reported less-than-stellar results. The market has been recently rewarding cannabis companies that have reported to be profitable (or at least are heading in that direction) and have punished those who have released numbers that are below expectations.

Canopy Growth Earnings are on Deck

We expect the market to be highly focused on Canopy Growth Corporation’s (TSX: WEED) (Nasdaq: CGC) which will report second quarter financial results before the market opens on November 5^th.

In September, several broker-dealers lowered their respective price target on Canopy Growth and this is a trend that we have been closely following. We consider this to be a bearish indicator for the Canadian cannabis producer and will monitor performance prior to the earnings report.

Although Canopy Growth has the strongest balance sheet in the cannabis industry, the management team has been slow to execute and has been forced to close facilities to lower expenses. We are cautious with the current trend and will monitor how international markets impact earnings results.

Aurora Cannabis to Report Earnings Next Week

Another Canadian LP that has been under pressure and is getting ready to report quarterly financial results is Aurora Cannabis Inc.  (TSX: ACB) (Nasdaq: ACB). We prefer Canopy Growth to Aurora Cannabis and continue to monitor  the Canadian company from the sidelines.

Aurora Cannabis will report first quarter financial results after the market closes on November 9^th and we expect to see volatile price swings after the report. Like Canopy Growth, Aurora Cannabis has been forced to close several facilities across the globe to conserve cash and we believe the business has suffered as a result.

From Latin America to Canada, Aurora Cannabis has closed facilities that cost more than $100 million to construct. We are less confident in the new management team’s vision and will monitor how the story evolves from here. We believe that Aurora Cannabis needs to revisit its growth strategy and will remain cautious with the operator for the foreseeable future.

Organigram to Report Later this Month

Later this month, Organigram Holdings Inc. (TSX: OGI) (Nasdaq: OGI) will report quarterly financial results and we will monitor how the market responds to the numbers. Earlier this year, the Canadian LP received a large investment from British American Tobacco (Nasdaq: BTI) and we expect the relationship to play an important role in the growth of the business.

We consider the relationship with British American Tobacco to be an important differentiator for Organigram and will monitor how the relationship impacts the business in 2022 and beyond. Like Canopy Growth and Aurora Cannabis, Organigram has made significant changes to the management team in 2021 and we expect the new leadership team to have a major impact on the growth and the direction of the business.

Organigram has been also the subject of price target cuts from broker-dealers, and this is a trend that leaves us cautious in the near-term. Going forward, the Canadian LP needs to prove that it is executing on previously announced initiatives and will continue to closely follow the opportunity.

If you are interested in learning more about Canadian LPs that are getting ready to report earnings, please send an email to support@technical420.com with the subject “Canadian LPs Earnings” 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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