Monday, August 25, 2025

Latest

Stifel-GMP: Canopy Growth CEO’s Legacy is “Poor Execution, Misallocated Capital, and Mismanaged Expectations.”

Earlier this month, Canopy Growth Corp (TSX: WEED) (NASDAQ: CGC) reported their fiscal second-quarter 2022 financial results. The company reported declining revenues of $131.4 million, down 4% quarter over quarter. The company also reported negative gross margins due to an $87 million write-down.

Canopy commented that if you exclude non-cash charges, their gross margins could have been roughly 12%. The firm reported adjusted EBITDA of -$163 million, lower than the -$77 million last quarter. Canopy says that the wider losses were driven by lower sales and a decline in gross margins. The company ended the quarter with $2 billion of cash and equivalents, a decrease of $300 million.

It seems like every single one of Canopy Growth’s 15 analysts cut or downgraded Canopy after their results. This brought Canopy’s average 12-month price target to C$23.22, down from $26.64. Out of the 15 analysts, 2 have buy ratings, 10 have hold ratings, 1 analyst has a sell rating, and the last 2 analysts have strong sell ratings. MKM Partners currently has the highest 12-month price target of C$51, while the lowest sits at C$12.

In Stifel-GMP’s note, they reiterated their sell rating and cut their 12-month price target to C$12 from C$14 saying that these results, “represent the culmination of poorly executing a broadly undifferentiated strategy accompanied by mismanaged expectations.” They also believe that the control that Constellation Brands has over Canopy is negative and the control is “likely impeding any necessary strategic/personnel changes.”

For the quarterly results, Canopy came in below Stifel’s muted estimate of $135 million in revenue. The miss primarily came from the “Other” segment, with Storz & Bickel seeing a decline of 34% sequentially. Additionally, Canopy’s 12% gross margins when you back out impairments, came in well below Stifel-GMP’s estimates.

Stifel-GMP goes as far as saying that Canopy’s CEO, David Klein’s legacy with Canopy consists of “poor execution, misallocated capital, and mismanaged expectations.” Although they pass the majority of the buck off to Constellation, saying that with their majority control of the Board, Constellation has demonstrated, “a complete misunderstanding of the cannabis consumer, the industry with its inefficient capital markets dynamics, and U.S. federal reform prospects.”

Stifel-GMP has now cut Canopy’s fiscal full year 2022 estimates. They now expect revenue to be C$584 million, down from C$637 million. Their adjusted EBITDA loss estimate also grew from C$205 million to C$269 million. They say that these estimates are from management’s commentary on a muted Canadian performance, and price compression in Canopy’s global sales.


Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Video Articles

First Majestic Q2 Earnings: Another Record Quarter

Sandstorm Gold Fades Into Royal Gold Merger

Equinox Gold Q2 Earnings: Back On Track

Recommended

Emerita Resources Expands El Cura Drill Program By 10,000 Metres As Deposit Remains Open For Expansion

ESGold Signs MOU For Tailings Project In Colombia With Grades Up To 42 g/t Gold, 280 g/t Silver

Related News

Cronos: Raymond James Reiterates Price Target After PharmaCann Investment

Yesterday, Cronos Group (TSX: CRON) showed once again that the demand for U.S cannabis assets...

Tuesday, June 15, 2021, 05:50:00 PM

Canopy Growth Corp And Houseplant End Canadian Partnership

Canopy Growth Corp (TSX: WEEED) (NASDAQ: CGC) evidently will be losing one of its brands....

Wednesday, July 28, 2021, 07:56:16 AM

Canaccord Lowers Aurora Cannabis Price Target To $5 Following Q2 Earnings

On February 10th, Aurora Cannabis (TSX: ACB) reported its fiscal second quarter 2022 results. The...

Sunday, February 13, 2022, 05:16:00 PM

Kinross Gold: BMO Lifts Price Target On Chirano Mine Sale

Yesterday, Kinross Gold (TSX: K) announced the sale of its Chirano mine in Ghana. The...

Tuesday, April 26, 2022, 03:46:00 PM

Cresco Labs: Analysts Raise Targets Following Massachusetts Acquisition

On March 18th, Cresco Labs (CSE: CL) announced the acquisition of Cultivate, a Massachusetts-based vertically...

Tuesday, March 23, 2021, 11:53:00 AM