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MarketScreener Homepage  >  Equities  >  Toronto Stock Exchange  >  Canopy Growth Corporation    WEED   CA1380351009

CANOPY GROWTH CORPORATION

(WEED)
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Delayed Quote. Delayed Toronto Stock Exchange - 02/24 10:21:04 am
27.7 CAD   -4.19%
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Canadian pot producer Canopy may face challenges offloading assets, CEO says

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02/14/2020 | 04:08pm EST
A sign featuring Canopy Growth Corporation's logo is pictured at their facility in Smiths Falls

Canada's biggest cannabis producer, Canopy Growth Corp, could face challenges offloading assets as it seeks to winnow its facilities down to focus on its most lucrative markets and products, its chief executive told Reuters.

The company, which reported a smaller-than-expected third-quarter loss on Friday, is conducting a "thorough strategic review" of its production facilities as it seeks to cut costs and become profitable, executives said.

"There's not a lot of market demand for cannabis production facilities," David Klein, former finance chief of the company's biggest shareholder Constellation Brands, said in an interview. "There's a lot of capacity in Canada and no logical buyers."

More than a year after Canada legalized recreational marijuana, producers are scrambling to turn a profit as lower-than-expected demand and exuberant expansion hit sales and lift costs, while a cash crunch threatens many companies' survival.

Canopy first needs to ensure it generates as much cash as possible, said Klein, who became Canopy's CEO last month.

"Then, what we do as a secondary step with the assets... we'll figure that out over time," he added.

Canopy shares were up 16.2% at C$30.10 in afternoon trade in Toronto, paring its one-year loss to 53%.

Canopy had cash and equivalents of C$1.56 billion as of December, down from C$2.48 billion at the end of March 2019.

"We will be pretty aggressive in managing capital expenditure going forward," Klein said. "If we just take those measures, we have cash for the foreseeable future."

Canopy also plans to expand in the U.S. cannabidiol (CBD) market, he said.

CBD is a non-psychoactive compound in cannabis, and is also derived from hemp plant, the production and distribution of which the United States legalized in late 2018.

"We're in the process of building out a sales infrastructure in the U.S. so that we can call on the large retailers and get shelf placements," Klein said.

The company could move some Canadian resources to the United States to enable the expansion, he said.

Canopy executives said they aim to lift gross margin to 40% in the short term, from 34% in the third quarter, and will reduce share-based compensation by as much as 40% from the third quarter's C$56.8 million.

"They're nowhere close to posting a profit... and their free cash flow is quite negative, but it's going in the right direction," said Jason Zandberg, an analyst at PI Financial, who expects Canopy to follow rivals Aurora Cannabis, Tilray and Hexo in cutting jobs.

(Reporting by Shariq Khan in Bengaluru; Additional reporting by Nichola Saminather in Toronto; Editing by Anil D'Silva, David Gregorio, Bill Berkrot and Sonya Hepinstall)

By Shariq Khan and Nichola Saminather

Stocks mentioned in the article
ChangeLast1st jan.
AURORA CANNABIS INC. -0.90% 2.21 Delayed Quote.-20.79%
CANNTRUST HOLDINGS INC. -1.82% 1.08 Delayed Quote.-10.00%
CANOPY GROWTH CORPORATION -2.30% 28.91 Delayed Quote.5.86%
CONSTELLATION BRANDS, INC. -0.45% 207.4 Delayed Quote.9.30%
CRONOS GROUP INC. -2.88% 9.44 Delayed Quote.-5.32%
HEXO CORP. -3.14% 1.85 Delayed Quote.-10.63%
THE GREEN ORGANIC DUTCHMAN HOLDINGS LTD. -3.51% 0.55 Delayed Quote.-26.67%
THE SUPREME CANNABIS COMPANY, INC. -2.53% 0.385 Delayed Quote.-38.89%
TILRAY, INC. 0.68% 19.37 Delayed Quote.13.08%
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Financials (CAD)
Sales 2020 427 M
EBIT 2020 -805 M
Net income 2020 -1 933 M
Finance 2020 259 M
Yield 2020 -
P/E ratio 2020 -5,33x
P/E ratio 2021 -22,9x
EV / Sales2020 23,0x
EV / Sales2021 13,5x
Capitalization 10 108 M
Chart CANOPY GROWTH CORPORATION
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Technical analysis trends CANOPY GROWTH CORPORATION
Short TermMid-TermLong Term
TrendsNeutralNeutralBearish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 25
Average target price 31,43  CAD
Last Close Price 28,91  CAD
Spread / Highest target 108%
Spread / Average Target 8,71%
Spread / Lowest Target -41,2%
EPS Revisions
Managers
NameTitle
David Eric Klein Chief Executive Officer & Director
Rade Kovacevic President
Judy A. Schmeling Chairman
Andre Fernandez Chief Operating Officer
Mike Lee Chief Financial Officer
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CRONOS GROUP INC.-5.32%2 492
AURORA CANNABIS INC.-20.79%1 955