Analyst: Canopy's Earnings Reveal Stable B2B And Impressive CBD Sales; It's Still The Leader Of The Group

Canopy Growth Corporation WEEDCGC disclosed Tuesday its fourth-quarter and fiscal year 2021 financial results with a net loss for the year of CA$1.7 billion ($1.41 billion), representing a CA$283 million wider loss as compared to FY 2020. 

The Canadian cannabis giant also reported a quarterly net loss of CA$617 million, representing a CA$710 million narrower loss compared to the same quarter of fiscal 2020. Both adjusted EBITDA figures were negative amounting to a loss of CA$340 million for the year, and a loss of CA$94 million for the quarter. 

The Analyst

Cantor Fitzgerald’s analyst Pablo Zuanic kept a ‘Neutral’ rating on Canopy’s stock, lowering their price target to CA$30.50 from C$32.

The Investment Thesis

Canopy’s quarterly business-to-business sales were stable, and therefore better than its competition and previously provided outlook, explained Zuanic in a Tuesday note.

According to the analyst, good business-to-business sales in the quarter should reveal significantly advanced March shipments, with many other cannabis companies reporting double-digit drops in adult-use shipments for the same period. “So, in that context, these are good numbers.”

With CBD sales near CA$7 million, or a fourth of the size of Charlotte’s Web CWBHF, Canopy made terrific results in a short period, noted Zuanic.  

“Overall, we would call this a pretty decent top-line quarter given the industry context. Profit metrics worsened sequentially, but guidance for breakeven EBITDA by end of the fiscal year 2022 was kept.”

The analyst further noted that even though they remain ‘Neutral’ on the stock, they recognize that Canopy is the leader among other Canadian cannabis companies, “and with the sector outlook improving, we would expect the stock to move up today.”

Price Action 

Canopy’s shares were trading 0.47% lower at $24.17 per share at the time of writing.

Photo by Diyahna Lewis on Unsplash