- Canopy Growth on Thursday reported better-than-expected quarterly revenues thanks to huge legal-marijuana sales in Canada.
- Canopy’s recreational marijuana revenues were ahead of its one major competitor Aurora Cannabis’s adult use marijuana revenues.
- Canopy Growth will have a leading share position in the adult use market in Canada, a market that can increase to 12 billion Canadian dollars by 2025, according to Cowen analyst Vivien Azer.
- Watch Canopy Growth trade live.
Canopy Growth‘s strong quarterly revenues indicate the company is already the early leader in Canada’s marijuana market, an analyst says.
Thanks to Canada officially legalizing the recreational use of marijuana in October, the company generated 72 million Canadian dollars ($US54.3 million) in gross recreational marijuana revenue (pre-excise taxes). By comparison, rival Aurora Cannabis posted 22 million Canadian dollars ($US16.6 million) in net adult-use revenue (post-excise taxes).
Canopy’s recreational cannabis business represents a “strong start to the nascent market,” said Cowen analyst Vivien Azer in a note distributed Tuesday. She expects Canopy to have a leading share position in Canada’s adult use market, which she estimates (including medical) can increase to 12 billion Canadian dollars ($US9 billion) by 2025.
The company’s adult-use net-selling price of 6.96 Canadian dollars per gram also topped Azer’s expectations for 5 Canadian dollars per gram.
Azer maintained her outperform rating and 82 Canadian dollar price target for Canopy shares trading in Canada – 34% above where they were trading Tuesday.
In May 2018, Canopy Growth went public on the New York Stock Exchange. Shares were flat for the year until August, when Constellation Brands, the beverage maker behind Corona beer and Svedka vodka, announced a $US4 billion investment in the company, sparking a so-called green rush into the cannabis sector and causing companies across the industry to see their valuations more than double in a matter of weeks. Constellation’s deal closed in November.
Supported by the investment from the beverage giant, Canopy said in January that it will invest $US100-$US150 million in an operation site in the southern tier of New York to develop its first extraction and processing facility outside of Canada. The marijuana producer said it has received a licence from New York state to process and produce hemp, a source of the popular ingredient cannabidiol, or CBD.
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