Canopy Growth Stock Smokes Wall Street's Revenue Estimates

The security sports an over 211% nine-month lead

Digital Content Manager
Feb 9, 2021 at 10:58 AM
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The shares of Canopy Growth Corp (NASDAQ:CGC) are surging this morning, up 5.2% to trade at $46.17, after the cannabis name reported smaller-than-expected fiscal third-quarter losses, as well as a revenue beat. The firm attributed the upbeat results to aggressive cost-cutting measures, combined with increased demand for weed products during pandemic-induced lockdowns. Additionally, CGC said it expects to turn a profit in the second half of 2022.

Earlier today, the equity hit a fresh nearly two-year high of $46.45, toppling recent overhead pressure at the $45 mark. Shares have been tearing up the charts since late October, though, with the 20-day moving average coming in as support in early January, to guide shares higher. Longer term, Canopy Growth stock sports an impressive 211.3% nine-month lead.

Despite the positive price action, analysts are still very much hesitant towards the stock, leaving ample room for upgrades and/or price-target hikes moving forward. Of the 15 in coverage, 12 carry a lukewarm "hold" or worse rating. Plus, the equity's 12-month consensus target price of $26.82  is a whopping 41.4% discount to current levels.

And while shorts are already running for the exits, there is plenty of pessimism left to be unwound. Short interest fell 5.1% in the last two reporting periods, but the 31.91 million shares sold short make up 14% of CGC's available float, or nearly a week's worth of pent-up buying power. 

Drilling down to today's options activity, 21,000 puts and 18,000 calls have crossed the tape so far, which is three times what is typically seen at this point. Most popular is the monthly February 40 put, followed by the weekly 2/12 46-strike call, with new positions being opened at both.

Lastly, CGC's Schaeffer's Volatility Scorecard (SVS) stands at 93 out of 100, meaning the stock has easily exceeded options traders' volatility expectations during the past year.

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