Are Shares of Canopy Growth (CGC) a Buy at These Levels?

In recent months, Canopy Growth Corp (CGC) has received mixed forecasts from Wall Street analysts, with many of them taking note of the company’s acquisition sprees.

Today, CGC announced yet another all-cash deal for a majority stake in the…

CBD sports nutrition company, BioSteel Sports Nutrition Inc.

“This acquisition allows us to enter the sports nutrition space with a strong and growing brand as we continue towards a regulated market of food and beverage products that contain cannabis. We view the adoption of CBD in future BioSteel offerings as a potentially significant and disruptive growth driver for our business,” said Mark Zekulin, CEO of Canopy Growth Corp.

Canopy will own 72% of BioSteel (no terms were provided), with an agreed upon path to complete ownership. BioSteel brand ambassadors include NHL Hall of Famer Wayne Gretzky and current Dallas Cowboys star Ezekiel Elliott.

Analysts have mixed outlooks on CGC

On Tuesday, Piper Jaffray analyst Michael Lavery reiterated his Outperform rating for Canopy Growth and lowered his price target from $49 to $40.

Lavery anticipates that Canopy’s new management team will implement capital spending discipline, which should help the company become more self-sufficient as the cannabis industry matures.

“We continue to estimate a $250-500B potential long-term global cannabis market, with a $15-50B near-term opportunity, and believe Canopy is well positioned in the sector, particularly with US$2.3B in cash in an industry recently facing growing difficulty raising capital,” Lavery said.

The analyst noted that capital will probably become a key differentiator among marijuana stocks, given the vast amount of resources required to scale up operations.

Lavery added that he thinks Cronos (CRON) is the only other licensed producer that’s well-positioned enough to invest in growth without needing to raise capital.

The analyst also mentioned the while he thinks the recent spate of vaping-related illnesses and talk of regulatory crackdown may create some near-term headwinds for the cannabis industry, he expects that vaping will still become a long-term bullish catalyst.

Last week Bank of America analyst Christopher Carey lowered his price target for CGC stock, downgrading it from “buy” to “neutral,” citing…

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