Major Broker Deals Have Gone Bearish On Canopy Growth Following Another Quarter Of Impressively Burning Cash

Several leading Canadian broker-dealers responded negatively to Canopy Growth Corporation’s (TSX: WEED) (Nasdaq: CGC) fourth-quarter financial results and have lowered their price target on the company.

Canopy Growth CEO stated that he was a little concerned about the headwinds that it continues to face as a result of the Covid pandemic. These comments seem to have spooked the market and Canopy Growth came under additional pressure after its post-earnings report conference call and we will monitor the trend from here. 

Below, we have highlighted the ratings and price target changes that were reported after the first-quarter earnings report. When 6 broker-dealers lower their respective price targets on a company, we find the trend to be of significance and believe our readers should be aware of this.

1. Alliance Global Partners lowered its price target to C$32 from C$40
2. CFRA downgraded Canopy Growth from Strong Buy to Buy and lowered its price target to C$45 from C$75
3. Cowen and Company lowered its price target to C$39 from C$44
4. CIBC lowered its price target to C$36 from C$38
5. MKM Partners lowered its price target to C$51 from C$55 
6. Eight Capital upgraded Canopy Growth from Sell to Hold and lowered its price target to C$29 from C$34.50
7. Canaccord Genuity upgraded Canopy Growth from Sell to Hold and lowered its price target to C$30 from C$32

During the quarter, Canopy Growth strengthened its balance sheet by securing a $750 million senior secured term loan that provides it with the ability to raise an additional $500 million in debt. We expect the strength of the company’s balance sheet to play an important role in the performance of the business on a going-forward basis and we will monitor how the management team continues to execute on cost-cutting initiatives.