Analyst: Sales Trends Under Pressure at Canopy Growth

Short sellers have been building their positions

Assistant Editor
Dec 20, 2021 at 10:11 AM
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The shares of Canopy Growth Corp (NASDAQ:CGC) are down 5.8% at $9.03 this morning, after Piper Sandler downgraded the equity to "underweight" from "neutral." The firm also slashed is price target to $7 from $11, with the firm noting a number of sales trends under pressure within Canopy's businesses.

The brokerage bunch was already bearish towards Canopy Growth stock coming into today. Of the 13 analysts in question, 14 carried a tepid "hold" or worse rating, while just one recommended a "strong buy." However, the 12-month consensus target price of $12.56 is a 41% premium to current levels, indicating more price-target cuts could be on CGC's horizon.

Short sellers have been piling on, as well. Short interest rose nearly 16% during the last two reporting periods, and the 37.93 million shares sold short makes up 15.1% of the stock's available float. It would take over a week to cover these bearish bets, at the stock's average pace of daily trading.

Some options traders are likely cheering the bear note one, as puts have been more popular than usual of late. This is per Canopy Growth stock's 10-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 87% of readings in its annual range.

On the charts, the 20-day moving average has pressured the security lower the latter part of the year and is now trading at its lowest level since 2017. Headwinds have formed in the wake of some cannabis sector updates, and despite the fact that the equity snapped a four-week losing streak last week, CGC remains down  64.1% year-to-date.

 




 
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