GMP Lifts Canopy Growth Price Target After New York Grants Company Hemp License

Canadian cannabis company Canopy Growth Corp CGC confirmed Monday that it received a license to produce and process hemp in New York, prompting GMP to turn incrementally bullish on the stock.

The Analyst

Analyst Martin Landry maintains a Buy rating on Toronto-listed Canopy Growth stock with a price target lifted from CA $50 ($37.74) to CA $70 ($52.83). 

The Thesis

Canopy said it will invest $100 to $150 million in establishing a large-scale hemp extraction and product manufacturing in New York, Landry said in a Tuesday.

The company harvested 4,500 acres of hemp last fall — good enough for 7 tons of CBD extract, the analyst said. 

Canopy can leverage its first-mover advantage in the U.S. by starting with New York and eventually expanding nationwide, Landry said. CBD represents a $50-billion market across multiple products, so even a minor share equates to "material" potential for Canopy, he said.

Canopy is likely to unveil new brands and product assortments in the first half of 2019, and its partner Constellation Brands, Inc. STZ could play a role, the analyst said. 

GMP said its upwardly revised price target for Canopy is driven by the "significant" green-light the company was given to operate in New York, as the stock now offers investors exposure to the U.S. market. 

Price Action

Canopy Growth shares were trading higher by 5.53 percent at $44.82 at the time of publication Tuesday. 

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