[ad_1]
Text size
CFO Mike Lee said Canopy is committed to being profitable in terms of Adjusted EBITDA in the second half of fiscal 2022.
Larger-than-expected losses continued at Canopy Growth into its fiscal fourth quarter, pushing the stock lower on Tuesday afternoon.
Canopy (ticker: CGC) reported a fourth quarter net loss of C $ 700 million (US $ 580.9 million), or C $ 1.85 per share. The consensus expectation on Wall Street was that the loss would be 25 cents Canadian, according to FactSet. Net income of C $ 148.4 million is lower than an estimate of C $ 151.4 million, according to FactSet.
Canopy stock was down 4.4% to $ 24.94 on Tuesday afternoon. The ETFMG Alternative Harvest (MJ) cannabis exchange-traded fund was down 2.5%, while the S&P 500 index was flat.
While we did not expect a significant operational beat in 4Q21, Canopys’ losses were larger than expected, MKM Partners analyst Bill Kirk wrote on Tuesday. The adjusted gross margin of 14% was particularly disappointing, compared to 26% in the third quarter and 42% the previous year.
CFO Mike Lee said in the earnings release that the company is working to cut costs and achieve savings of between C $ 150 million and C $ 200 million over the next 18 months. He said the company is committed to becoming profitable at least in terms of adjusted earnings before interest, taxes, depreciation and amortization in the second half of fiscal 2022.
After Canopys 4Q21 and with the reopening of the Canadian economy, we expect the company to return to sequential growth and have better aligned its supply / logistics chain to seize domestic and international demand opportunities, wrote Kirk.
Kirk maintained his buy rating with a target price of C $ 55. He said that while he believes the US market will ultimately be the best opportunity for cannabis, the improvement in Canopys’ position in Canada is a positive sign.
CFRA analyst Garrett Nelson, however, downgraded his rating on Canopy stock to buy from Strong Buy.
While the company’s results are disappointing, we believe investors will likely overlook the weaker-than-expected quarter and focus on updating the positive outlook, Nelson wrote. We lower our opinion to Buy from Strong Buy as we are less bullish on the outlook for stocks over the next 18 months but see medium reversal potential.
Write to Connor Smith at [email protected]
[ad_2]
picture credit