MKM Partners analyst Bill Kirk boosted his rating on Canopy Growth's stock from neutral to buy. He sees the cannabis company's Canada-listed shares climbing to $55 Canadian dollars ($45.58), or roughly triple their current price.
Kirk said expectations for Canopy and other marijuana stocks are so low that its shares are now presenting investors with a "very favorable" risk-to-reward opportunity. Canopy's revenue growth will reaccelerate along with Canada's economy as the COVID-19 crisis subsides, according to Kirk, while the company's recent supply chain improvements should also help to boost sales.
Shareholders will receive an update on Canopy's growth initiatives and operational improvements when it reports its fiscal 2021 fourth-quarter financial results before the financial markets open on June 1.
Looking further ahead, Kirk sees Canopy making a major push into the U.S. cannabis market, driven in part by its partnerships with Constellation Brands and Southern Glazer's Wine & Spirits. While federal legalization remains uncertain, he notes that the U.S. marijuana industry "is worth more than all other markets combined."