Canopy Growth was downgraded at BofA Securities with the analysts noting “execution challenges and a tough Canadian operating environment.”
Analyst Lisa Lewandowski wrote in a note Wednesday that she sees “long-term potential for the legal cannabis industry driven by U.S. federal legalization and changing attitudes toward cannabis consumption,” but was downgrading the stock of Canopy Growth (ticker: CGC) to Underperform from Neutral.
U.S.-listed shares of the Canadian cannabis company fell 3% to $9.37. The stock has declined 62% in 2021.
Lewandowski said Canopy Growth’s relationship with Constellation Brands (STZ) was a plus, but the company “has shown mixed progress on key performance metrics, is confronted with a rapidly evolving Canadian market with new entrants taking market share and changing consumer tastes, lackluster industry growth even with new stores opening and limited visibility for profitability.”
Constellation Brands owns a 36% stake in Canopy Growth, according to FactSet.
Recent management changes at the company and the planned sale of C3, a German pharmaceutical company, were efforts at Canopy Growth that “will take time to show results,” the analyst said.
BofA reduced its price target on U.S. shares to $7.94 from $15.15.