Canopy Growth Posts Narrower Q2 Loss; Shares Plunge

Canopy Growth (WEED) reported a slight decline in revenues in its second quarter, but its loss narrowed compared to a year earlier. The giant cannabis company sells a wide range of products including cannabis-infused beverages, edibles, dried flowers, and vapes.

Revenue & Earnings

Net revenue came in at C$131 million for Q2 2022, a decrease of 3% from Q2 2021.

Net earnings for the quarter ended September 30, amounted to a loss of C$16 million (C$0.03 per share), an improvement of C$80 million compared to the prior-year quarter.

Adjusted EBITDA loss in Q2 2022 widened by C$77 million to C$163 million due to lower sales and a decline in operating margins.

Profit Target is Delayed

Canopy Growth has delayed its objective of turning a profit in the second half of fiscal 2022, blaming slower-than-expected sales growth for its CBD-infused products in the U.S. and supply issues in Canada. The company hasn’t specified a new profitability target. (See Analysts’ Top Stocks on TipRanks)

Canopy Growth CFO Mike Lee said, “Achieving profitability remains a top priority. We are focused on increasing market share in Canada, premiumizing our product mix and delivering on our cost savings commitment.”

Wall Street’s Take

On November 2, CIBC analyst John Zamparo reiterated a Hold rating on WEED and set a price target of C$21. This implies 42.5% upside potential.

Overall, WEED scores a Hold rating among Wall Street analysts based on one Buy and eight Holds. The average Canopy Growth price target of C$26.37 implies 79.1% upside potential to current levels

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