Should you sell your Canopy Growth stock?

In a Nov. 9 report, Roth Capital Markets analyst Bill Kirk maintained his “Buy” rating and C$8.00 price target on Canopy Growth (Canopy Growth Stock Quote, Chart, News, Analysts, Financials TSX:WEED), saying the company’s fiscal second-quarter results highlight improving profitability, tighter cost control, and progress toward sustainable operations.

Canopy, based in Smiths Falls, Ont., produces and sells medical cannabis and cannabinoid-based consumer products in Canada and internationally, with brands including Storz & Bickel, This Works, and BioSteel.

Kirk said the company delivered its narrowest Adjusted EBITDA loss to date, reporting –C$3.0-million versus consensus of –C$4.9-million, helped by gross margin expansion to 33% from 25% in the prior quarter and a 13% year-over-year decline in SG&A expenses.

“Where disruptions once derailed results, the underlying progress now shines through,” he said, adding that Canopy’s improved balance sheet should reduce reliance on equity issuance and allow investors “to focus on operational improvement.”

For the second quarter of fiscal 2026, Canopy posted net sales of C$66.7-million, up 6% year-over-year but down 8% sequentially, compared with consensus of C$71.2-million. By segment, Canadian adult-use cannabis sales were C$23.9-million (+30% year-over-year, –11% quarter-over-quarter), Canadian medical sales were C$21.8-million (+17% year-over-year, +3% quarter-over-quarter), international cannabis sales totaled C$5.1-million (–39% year-over-year), and Storz & Bickel contributed C$15.9-million (–10% year-over-year, +5% quarter-over-quarter).

Segment margins improved meaningfully, with cannabis gross margin rising to 31% from 24% in Q1, and Storz & Bickel margins at 38% from 29%. Operating cash performance also strengthened despite lower international revenue, which Kirk said was impacted by supply chain disruptions.

Looking ahead, Kirk models third-quarter revenue of C$72.6-million and Adjusted EBITDA of –C$2.2-million, with fiscal 2026 forecasts now at C$285.5-million in revenue and –C$10.9-million in Adjusted EBITDA. He projects a return to profitability in fiscal 2027, with C$298.2-million in revenue and C$37.8-million in Adjusted EBITDA.

“With a reorganization that fosters more productive allocation of supply, Canopy is capturing the most profitable demand opportunities,” Kirk said.

He said that U.S. subsidiary Canopy USA, while seeing slower sales momentum from Acreage Holdings, still gives the company strategic exposure to U.S. markets ahead of potential federal reform.

Although break-even EBITDA remains just out of reach, results clearly show that inflection is on the horizon, Kirk said.

“We still believe valuation has been overly punitive, given the progress, adjustments, and exposures.”

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