Is Canopy Growth stock a buy? (November, 2024)

It has experienced a hiccup, but the company is still on the right path.

That’s the opinion of Roth MKM analyst Bill Kirk on Canopy Growth (Canopy Growth Stock Quote, Chart, News, Analysts, Financials TSX:WEED).

In a research update to clients November 10, the analyst maintained his “Buy” rating on WEED, but lowered his price target from (C)$18.00 to $15.00.

Kirk broke down where Canopy is right now, following the October 9th acquisition of US-based cannabis player Wana.

“Canopy has made tremendous progress rationalizing its business toward profitability and best opportunities (from adj. EBITDA losses of ~C$400mn to near break-even),” he wrote. “However, improvements stalled in 2Q’25 (adj. EBITDA in-line with prior quarter), due to temporary production disruption of Wana. As Wana recovers, consolidated profitability reaccelerates, via international margin expansion and strength of Storz & Bickel. There is no legislative hope imbedded in shares, creating a cheap option at floor fundamentals.”

Kirk thinks WEED will post an EBITDA loss of $93.8-million on revenue of $329.6-million. In fiscal 2025, he expects the company will post an EBITDA loss of $18.0-million on a topline of $263.9-million.

“We are lowering our price target slightly with reduced profitability estimates for the next 12-month period,” the analyst added. “Our C$15 (from C$18) price target is DCF based and implies ~13x EV/FY26 EBITDA for current business and ~15x EV/EBITDA for business combined with U.S. assets. We assume: 1) Canopy achieves positive adjusted EBITDA in 1Q’26 (from 2H’25); 2) Canopy USA generates ~$60M in adj EBITDA (~C$80M); 3) terminal growth market of 3% (global pop plus inflation); 4) capex normalizes at C$20M; and 5) a WACC of ~8.8%. Impediments to achieving our PT include: 1) an inability to take full/consolidated ownership of U.S. assets; 2) equity financing/asset sales disappoint; and 3) continued inaction on U.S. legislative front.”