Canopy Growth shares soared 4.5% in early trading Wednesday after the cannabis company announced it has signed a deal with Southern Glazer’s Wine & Spirits to distribute CBD-infused drinks in the United States. Southern Glazer is North America’s largest beverage alcohol distributor.
Under the agreement, Southern Glazer’s will distribute Canopy Growth’s (WEED) CBD beverages, starting with the distribution of CBD-infused sparkling water brand Quatreau in seven states, with more states in the coming months.
Southern Glazer’s Wine & Spririts’ Chief Growth Officer David Chaplin said, “There is strong consumer interest in the CBD-infused beverage category and our distribution network is uniquely positioned to deliver the most efficient and effective route-to-market for CBD suppliers and retail customers. We’re proud to align with Canopy Growth, a company well-positioned to lead this product category with a portfolio of premium, highly desirable consumer brands.”
This agreement also demonstrates the benefits of Canopy Growth’s strategic partnership with Constellation Brands (STZ), the world’s leading beverage company and investor in the Canadian cannabis company.
Two weeks ago, Alliance Global Partners analyst Aaron Grey maintained a Hold rating but lowered his price target to C$40.00 from C$60.00 (20% upside potential). Grey told investors in a research note the firm lowered estimates for the fourth quarter based on declining sales for the quarter due to COVID impacts, provincial inventory rationalization, as well as seasonality, with Canopy Growth potentially having a greater impact than its peers because of its retail channel, which the analyst thinks will underperform B2B.
Overall, the consensus is that Canopy Growth is a Hold, based on 1 Buy, 9 Holds, and 3 Sells. The average analyst price target of C$45.00 implies an upside potential of about 35% to current levels. Shares have plunged by about 20% over the past month. (See Canopy Growth stock analysis on TipRanks)