Canopy Growth stock downgraded to “Underperform” at ATB

With the sector facing headwinds and the company saddled with too much debut, ATB Capital analyst Frederico Gomes has lowered his expectations from Canopy Growth Corp (Canopy Growth Corp Stock Quote, Chart, News, Analysts, Financials TSX:WEED).

As reported by the Globe and Mail, Gomes December 17 downgraded WEED from “Sector Perform” to “Underperform” and cut his price target on the stock from $6.00 to $4.00.

“Canopy Growth is making progress in cutting costs and improving margins to reach positive adj. EBITDA,” he said. “We like the asset-light strategy that reduces the need for capital investments, but we think the current size of the business is too small relative to the debt. While debt is being reduced, the balance sheet is still overleveraged; to deal with the balance sheet, we think Canopy Growth may have to rely on further equity dilution, which may continue to put the stock under pressure. Moreover, the U.S. cannabis market is facing headwinds, which reduces the potential value of Canopy USA. The combination of those factors supports our move to an Underperform rating.”

On November 8, WEED reported its Q2, 2025 results. The company posted an Adjusted EBITDA loss of $6.0-million on Net Revenue of $62.9-million, a topline that was down 9% year-over-year.

“We delivered a solid second quarter led by strong growth across our Storz & Bickel, Canadian medical, and European cannabis businesses and we are well positioned to accelerate momentum in the second half of our fiscal year. In addition, we remain highly optimistic about the momentum building within Canopy USA as this strategy was uniquely designed to succeed independent of the need for federal legalization,” CEO David Klein said.