Canopy Growth Shares Surge After Q3 Results

Canopy Growth (TSE: WEED) reported a 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 beverage, edibles, dried flowers, and vapes. 

Revenue & Earnings 

Net revenue came in at C$141 million for Q3 2022, a decrease of 8% from Q3 2021.  

Global cannabis net revenue was C$83 million in the quarter, down from C$103.8 million, while other consumer products revenue totaled C$58 million, down from C$48.7 million a year earlier.

Canadian recreational cannabis sales fell 25% from a year earlier, while Canadian medical cannabis sales fell 7%. International and other cannabis sales fell 16%.

Net earnings for the quarter ended December 31, 2021, amounted to a loss of C$115 million (-C$0.28 per share), an improvement of C$714 million compared to the prior-year quarter.   

Adjusted EBITDA loss in Q3 2022 narrowed by C$1 million to C$67 million mainly due to the reduction in total SG&A expenses, mainly offset by lower sales and lower gross margins.

CEO Commentary

Canopy CEO David Klein said, “In the third quarter we actioned to win where it matters – driving record performance in our CPG business from both BioSteel and Storz & Bickel, while beginning to stabilize our Canadian business including maintaining the #1 position in premium flower. Our continued discipline and focus are expected to fortify Canopy’s competitive positioning in Canada as we ambitiously build our U.S. CPG, CBD, and THC strategies.”                                                      

Wall Street’s Take 

On February 8, MKM Partners analyst William Kirk kept a Buy rating on WEED and set a price target of C$17. This implies 53.9% upside potential. 

Overall, WEED scores a Moderate Sell rating among Wall Street analysts based on one Buy, four Holds, and six Sells. The average Canopy Growth price target of C$11.94 implies 7.6% upside potential to current levels 

TipRanks’ Smart Score

Canopy Growth scores a 1 out of 10 on TipRanks’ Smart Score rating system, indicating that its stock has a good chance of performing worse than the overall market.

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