Emerging evidence that the international ambitions of Canopy Growth Corp. (TSX:WEED) are progressing faster than expected has Canaccord Genuity analyst Neil Maruoka raising his target price on the stock, though the analyst is still not recommending investors buy the stock at current levels.
Maruoka says ahead of the company’s third quarter results he has reassessed Canopy’s international opportunities and come to the conclusion that Canadian companies have an unprecedented chance to dominate on the world stage and that Canopy is particularly well-positioned to be “a dominant global player”.
“Never before have we witnessed burgeoning international markets with essentially no competition from US industry (given currently restrictive federal legislation),” Maruoka says. “As other countries seek to establish durable and stable cannabis infrastructure, we believe that Canadian companies are poised to take a leadership role through the export of both product and production know-how.”
In a research update to clients Monday, Maruoka maintained his “Hold” rating, but raised his one-year price target on Canopy Growth Corp from $18.50 to $26.00, implying a return of negative 7.7 per cent at the time of publication.
“With a substantial head start on competition, Canopy is leading the way in Germany, the rest of Europe, and other emerging international markets, and we believe the company could have one of the largest international footprints amongst all LPs. As Canopy establishes low-cost greenhouse operations internationally, we expect stronger margins in these markets with higher medical pricing and reimbursement.
Maruoka thinks Canopy will generate EBITDA of $7.1-million on revenue of $116.0-million in fiscal 2018. He expects those numbers will improve to EBITDA of $139.9-million on a topline of $497.0-million the following year.