by Ian Harvey
August 16, 2019
Canopy Growth stock has moved up over the past two weeks from $23.49 to $27.66 last week, due to favorable comments from stock analysts. Analysts believed that market participants had discounted Canopy's prospects too much, and it had responded in kind. But, will this momentum continue - so, where to from here? What will “Stock Options Made Easy” members be trading now?
“Cut-To-The-Chase” Members are already up 80% potential profit on an Option Call. Will they hold for more – find out?
A NICE POTENTIAL PROFIT FOR THE WEEK!
At the time of the recommendation the stock market had gotten off to a good start on the Monday morning, rebounding from a big drop from the previous Friday. Investors seemed more willing to believe that trade negotiations between the U.S. and China, at the time, could continue to make progress.
Shares of Canopy Growth Corp (NYSE: CGC) were also up Monday morning after favorable comments from stock analysts. Seaport Global raised its rating on the cannabis cultivator from neutral to buy and set a price target of $31 per share.
Seaport noted the fact that Canopy's stock has seen a big drop in recent months, as investors in cannabis generally have been a bit less comfortable taking on the risks involved in the high-growth industry. For Canopy Growth in particular, the abrupt departure of former co-CEO Bruce Linton also introduced considerable uncertainty about the marijuana company's future strategic direction. In Seaport's view, however, the decline in Canopy's share price creates a good value opportunity, and the marijuana industry as a whole still appears to have good prospects.
Like many cannabis companies, Canopy Growth is spending a lot of money trying to grow and sustain its leadership role in the space. Yet fundamentally, some trends at Canopy look troubling, including the decline in pricing power for recreational marijuana sales over the past few quarters.
Analysts believe that market participants have discounted Canopy's prospects too much. With the stock near its lowest levels in more than a year, those who like good value are starting to give the marijuana company a closer look.
YOU NEED TO BE IN TO PROFIT!
Positive Factors at the time of the recommendation…..
During the past couple of months, everything appears to have turned around. Canopy Growth shares fell by 51.7% after hitting a high point in May. Bruce Linton, the company's longtime CEO and co-founder, was fired suddenly in July. By the time the company released its quarterly financials in mid-August, shareholders were shocked by a $1.4 billion loss. Its market cap today stands at just $8.52 billion, and while Canopy Growth is still looking to appoint a new CEO in the months to come, Mark Zekulin is currently filling the role until a replacement is found.
It's worth noting that other major cannabis stocks have recovered from drastic declines in the past.
Canopy Growth, the largest marijuana stock in the world, is a company that's been aggressively pushing into external markets. Including Canada, Canopy has a presence in 16 countries, none of which bears more importance than the United States.
The most optimistic estimates suggest that the U.S. cannabis market could reach $100 billion in annual sales in a decade. In the meantime, Canopy Growth has acquired intellectual property company ebbu in Colorado, which was awarded a hemp-processing license in New York State, and agreed to buy Acreage Holdings on a contingent-rights basis in a $3.4 billion cash-and-stock deal, when announced. This last deal is contingent on the U.S. federal government legalizing marijuana.
Then again, Canopy Growth is interested in more than just the U.S. market. The company's medical and research brand, Spectrum Therapeutics, is operating in more than a dozen countries, with plenty of potential for growth throughout Europe and South America.
Canopy Growth Fired Bruce Linton…..
Linton recently said in an interview about Canopy's stock that "a 52-week low is a good thing, right, if you're trying to buy. It's bad to sell," as he announced he was buying up more shares in the company.
Despite the current woes for Canopy Growth, Linton is looking at the big picture. He stated in an email that his former company "continues to execute on the emerging opportunity for increasingly sophisticated global and national recreational and medical products." He added, "This is a vision and dedication exercise that is designed to reward shareholders over a huge and rapidly emerging market."
There's no question that Bruce Linton has long been one of the loudest cheerleaders for the cannabis industry. This is the guy that once predicted that Canopy Growth would disrupt four different multibillion-dollar industries. Linton still thinks the global cannabis market will be huge. And he continues to believe that Canopy Growth sits in the driver's seat.
Past earnings for Canopy Growth …..
Disappointing earnings in August only added to the unabated selling pressure. Some of the selling was warranted, given the parabolic rise in the Canopy Growth stock price. The carnage, however, is getting overdone and it's time for CGC to begin to "light up" once again.
CGC reported earnings and it missed on both the top and bottom line. The news sent Canopy Growth stock skidding over 10% with shares trading at the lowest levels of the year near the $27 area.
The technicals point to a potential pop for Canopy Growth stock following that sharp drop.
Canopy Growth Corp received bullish attention, with Seaport Global Securities upgrading its stance to "buy" from "neutral" and setting a $31 price target. CGC shares were last seen trading around $25.00. Most other analysts are bullish, too, with nine of 14 in coverage handing out "buy" or "strong buy" recommendations.
The company currently has a consensus rating of “Buy” and an average target price of $55.13 – a 100% up from where it sits today!
What now for Canopy Growth?
Canopy Growth has moved from a low of $23.49, when the options trade was recommended, to $27.66 as of Wednesday last week.
So, where to now for Canopy Growth? Will the stock price continue upwards, track sideways, or fall back?
Find out what we are recommending “Stock Options Made Easy" members to do – take profits, double-down, or execute a different trade?
AS ALWAYS THE DECISION IS YOURS!
An Important Note: That any suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.
It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented. GREED can be the undoing of a nice profit!