Canopy Growth Corp’s BC greenhouses are running smoothly, GMP says

Following a tour of Canopy Growth Corp’s (Canopy Growth Corp Stock Quote, Chart TSX:WEED, NYSE:CGC) Aldergrove and Delta facilities, GMP Securities analyst Martin Landry says things are on track.

On Tuesday, WEED hosted a tour of its BC facilities, which Landry attended.

“The BC greenhouses appear to be running smoothly across all areas of production, trimming and drying,” the analyst said.

Landry thinks that, over time, the BC facilities could produce 300 tonnes annually.

“The facilities are ramping up production with only 400k sq. ft. of greenhouse currently unlicensed, the application for which has been submitted. With a number of harvests already under the belt, the ramp up focus is on increasing yields and shortening cycle time. WEED expects it can achieve an equivalent of over four harvests per year. Canopy has trimming and drying capacity to handle the full production of the BC Tweed facilities.”

In a research update to clients today, Landry maintained his “Buy” rating and one-year price target of (C) $72.00 on Canopy Growth Corp, implying a return of 20.7 per cent at the time of publication.

Landry thinks Canopy will post EBITDA of negative $216.6-million on revenue of $239-million in fiscal 2019. He expects those numbers will improve to EBITDA of negative $51.8-million on a topline of $799-million the following year.

The analyst adds that he thinks production cost of $0.50 per gram is achievable at Canopy;s BC facilities.