CIBC Capital Markets maintained the Underperform rating of Canopy Growth and cut the target to $3 from $5.
STA Research cut the target to $6.50 from $8.75, and maintained the Buy rating on the company’s stock price.
Canopy Growth Corp.’s debt rating was reduced by Fitch Ratings on Monday. The company’s ability to maintain its capital structure is still unknown, according to Fitch Ratings. Canopy’s ability to increase its profits before interest, taxes, depreciation, and amortisation (Ebitda) and achieve operating cash flow breakeven in fiscal 2025 as predicted by Fitch is very improbable, according to the ratings agency. In order to reflect “important market changes,” Fitch reduced Canopy Growth’s long-term issuer default rating from B- to CCC.
Canopy Growth Corp Stock Analysis:
Based on the Canopy Growth Corp stock forecasts from 14 analysts, the average analyst target price for Canopy Growth Corp is CAD 9.63 over the next 12 months. Canopy Growth Corp’s average analyst rating is Hold . Stock Target Advisor’s own stock analysis of Canopy Growth Corp is Neutral, which is based on 3 positive signals and 3 negative signals. At the last closing, Canopy Growth Corp’s stock price was CAD 4.49. Canopy Growth Corp’s stock price has changed by +2.98% over the past week, -26.99% over the past month and -85.08% over the last year.
What we like:
High market capitalization
This is one of the largest entities in its sector and is among the top quartile. Such companies tend to be more stable.
Superior risk adjusted returns
This stock has performed well, on a risk adjusted basis, compared to its sector peers(for a hold period of at least 12 months) and is in the top quartile.
Underpriced compared to book value
The stock is trading low compared to its peers on a price to book value basis and is in the top quartile. It may be underpriced but do check its financial performance to make sure there is no specific reason.
What we don’t like:
The total returns for this company are volatile and above median for its sector over the past 5 years. Make sure you have the risk tolerance for investing in such stock.
The company is in the bottom half compared to its sector peers on debt to equity and is highly leveraged. However, do check the news and look at its sector and management statements. Sometimes this is high because the company is trying to grow aggressively.
The company had negative total cash flow in the most recent four quarters.