Stifel: Canopy Growth Is The 'Best Investable Opportunity' In Cannabis

A wave of Wall Street analysts are initiating coverage of the cannabis space for the first time, and Stifel is the latest firm to weigh in on Canopy Growth Corp CGC.

The Analyst

Stifel's W. Andrew Carter initiated coverage of Canopy with a Buy rating and a C$64 ($47.77 USD) price target.

The Thesis

Carter said Canopy is leading the cannabis pack when it comes to expanding its large-scale national infrastructure in Canada.

“We believe Canopy Growth represents the best investable opportunity for capitalizing on the growth of the global cannabis category with Canopy sporting definitive leadership in the Canadian cannabis market, multiple avenues for attacking the U.S. market with Canopy positioned for success no matter the timeline for U.S. federal legalization, and advantaged positions for capitalizing on global medical-use opportunities,” Carter wrote in a note.

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He said the $4 billion investment by Constellation Brands, Inc. STZ last year has helped fuel Canopy’s aggressive growth strategy by funding potential acquisitions. Constellation also has the resources to help Canopy continue to build up its national supply chain and develop new products, Carter wrote.

In particular, Carter said Canopy’s partnership with Constellation could differentiate the company when it comes to the cannabis-infused beverage market.

Carter said Canopy has a huge advantage in the U.S. market in a potential federal legalization scenario thanks to its option to acquire Acreage Holdings. Canopy is not financially committed to the deal unless the U.S. legalizes cannabis, which protects investors financial interests.

Price Action

Canopy shares traded about 1 higher to $41.22 on Thursday.

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