Analyst Cuts Canopy Growth Stock Price Target on Dismal Outlook

The stock has been on a downward slope since February

Deputy Editor
Sep 20, 2021 at 10:01 AM
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The U.S.-listed shares of Canopy Growth Corp (NASDAQ:CGC) are down 4.8% to trade at $14.01 this morning, weighed down by a price-target cut from Cantor Fitzgerald. The analyst slashed its price estimate to C$21 from C$30.50, citing the pot company's lowered sales outlook, while maintaining its "neutral" rating. 

It looks like other analysts could follow suit. The 12-month consensus price target of $22.99 is a 65.4% premium to last night's close. Meanwhile, three of the 13 in coverage consider CGC a "strong buy," compared to nine "hold" ratings, and one "sell."

It's been a rough year for CGC, which has been on a steady decline since its Feb. 10, three-year peak of $56.50. The equity has more than halved since then, and the stock is down 43.6% year-to-date. Recently, Canopy Growth stock has been struggling with pressure at the $15 region, which last acted as a ceiling in September 2020. 

An unwinding of bullish sentiment in the options pits could eventually put even more pressure on the stock. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 4.83 calls have been picked up for every put over the past two weeks -- creating a ratio that stands higher than 55% of readings from the past year. 

Options look like the way to go when speculating on CGC's next move. The security's Schaeffer's Volatility Index (SVI) of 61% stands in the 17th percentile of its annual range, implying options traders are pricing in relatively low volatility expectations at the moment. What's more, the stock's Schaeffer's Volatility Scorecard (SVS) sits at 72 out of 100. This mean Canopy Growth stock tends to exceed these traders' volatility expectations -- a good thing for options buyers. 

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