Bank of America Securities analyst Lisa Lewandowski has reiterated their bearish stance on CGC stock, giving a Sell rating on November 9.
Lisa Lewandowski from Bank of America Securities has given a Sell rating to Canopy Growth’s stock (CGC). This rating is primarily based on several factors including lower than expected sales and a complex industry environment. The second quarter of 2024 witnessed a 7% drop in net sales, which fell short of the estimate by C$2.6 million. Despite better sales from Canadian cannabis and This Works, the shortfall was due to lower Rest of World (ROW) and Storz & Bickel revenue. The company has initiated cost-cutting measures, totaling C$226 million since the beginning of fiscal year 2023, but this has not been enough to offset the impact of disappointing sales.
Moreover, Canopy Growth is operating under challenging industry conditions in Canada, such as discounting and illicit trade, alongside stalled U.S regulatory changes. These challenges have resulted in declining sales. The company’s future sales outlook for fiscal years 2024 and 2025 has also been revised downwards from C$329/C$304 million to C$291/300 million, further fueling the Sell rating. Additional factors influencing this rating include SEC investigations and investor lawsuits, which pose a significant risk to the stock’s performance. Despite the company’s progress in executing its strategy and cost-cutting measures, it remains a “show me” story due to these numerous headwinds.
In another report released on November 9, Canaccord Genuity also maintained a Sell rating on the stock with a C$0.50 price target.
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Based on the recent corporate insider activity of 44 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of CGC in relation to earlier this year.
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Canopy Growth (CGC) Company Description:
Canopy Growth Corp. engages in the production and sale of medical cannabis. The company offers products including oils and concentrates, soft gel capsules and hemp. It focuses on the treatment of chronic pain, seizures, muscle spasms, nausea, and loss of appetite. The company was founded by Bruce Linton on August 5, 2009 and is headquartered in Smith Falls, Canada.
Read More on CGC:
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- Canopy Growth Reports Second Quarter Fiscal Year 2024 Financial Results
- Canopy Growth options imply 16.4% move in share price post-earnings
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