Employees inspect and sort marijuana buds for packaging at the Canopy Growth facility in Smith Falls, Ontario, Canada.
Chris Roussakis/Bloomberg
Canopy Growth
shares fell sharply Monday after Piper Sandler downgraded stock of the cannabis product company as sales trends remain under pressure across its businesses.
Analyst Michael Lavery downgraded the stock to Underweight from Neutral, and also lowered the price target to $7 from $11. U.S.-listed shares of Canopy Growth fell 9.5% to $8.68.
Piper Sandler’s sum-of-the-parts analysis suggests greater downside toCanopy Growth (ticker: CGC) shares, despite the stock already falling more than 60% year to date.
“Canopy continues to lose share in Canadian recreational use cannabis, and its U.S. measured retail sales, while still small, are down ~30% since August,” said a note from the firm.
Thanks to the significant headwinds for recreational use products in Canada, Lavery lowered his fiscal third-quarter revenue estimates for Canopy to roughly C$130 million from C$150 million.
“Large licensed producers continue to lose share to smaller competitors, which we expect to likely continue into C22,” the note said.
When it released second-quarter earnings, Canopy said it expected revenue to increase in the second half of fiscal 2022 but the “magnitude and pace of improvement is expected to be more modest than previously anticipated.”
For all of fiscal 2022, Lavery reduced his sales estimates to about C$530 million from C$580 million. Fiscal 2023 sales were forecast by Lavery to be around C$655 million from roughly C$770 million.
Write to Karishma Vanjani at [email protected]
