Canopy Growth has price target chopped at Roth

Canopy Growth’s (Canopy Growth Stock Quote, Chart, News, Analysts, Financials TSXV:WEED) worst quarter for Adjusted EBITDA capped off its fiscal year. Still, Roth Capital’s Bill Kirk says the company’s operational overhaul could finally put it on a path to profitability, even as he trims his price target to $8.00 from $10.00

In his June 1 earnings analysis, Kirk said that while ending the year with the worst Adjusted EBITDA quarter isn’t encouraging, recent organizational changes should lead to a more focused, streamlined and ultimately more profitable business.

“Changing regulations in Poland resulted in lost high-margin sales, and discretionary spending pressures weighed on Storz & Bickel,” he said. “The final push to adj. EBITDA remains elusive, but levels are far better than losses of ~ $400mn in FY’22, and new changes/focus could produce the inflection.

“We reiterate our ‘Buy’ rating/lower PT to $8 (from $10).”

For the first quarter of fiscal 2026, Roth Capital expects net sales of $67.8-million, down from $74.5-million, and Adjusted EBITDA of ($6.8-million), revised from break-even. Kirk said the quarter will likely be affected by continued discretionary spending pressure on Storz & Bickel and volatility in international markets. For the full year, he now forecasts revenue of $285.3 million and Adjusted EBITDA of ($10.2-million), compared to prior estimates of $299.6 million and $11.2-million.

Kirk expects Canopy to post Adjusted EBITDA of ($23.5-million) on revenue of $269.0 million in fiscal 2025, improving to ($10.2-million) on $285.3 million in fiscal 2026. His previous forecasts were ($19.2-million) and $274.2 million for 2025, and $11.2 million and $299.6 million for 2026.

“With a reorganization that fosters more productive allocation of supply, we expect Canopy to better capture the most profitable demand opportunities (international markets and Canadian Medical),” he said. “Although break-even adj. EBITDA remains stubbornly elusive; results are far better than FY’22’s ~C$400mn EBITDA loss and -35% gross margins.

“Canopy USA, largely due to Acreage performance, has stumbled ($210mn run rate revenue from ~$300mn in 2023), but still positions Canopy to uniquely participate in U.S. markets (even without legislative change). The relentless equity issuance and dilution have made upside in shares very difficult, but we still believe valuation has been overly punitive, given the progress, adjustments, and exposures.”

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