Recommendation: Speculative Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 26 Aug, 25 | CGC | Speculative Buy | USD 1.44 | USD 1.52 | USD 1.6 | 1 day | Closed |
5.56%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
Canopy Growth Corporation, together with its subsidiaries, engages in the production, distribution, and sale of cannabis and hemp-based products for recreational and medical purposes primarily in Canada, the United States, and Germany. It operates through two segments, Global Cannabis and Other Consumer Products. The company's products include dried cannabis flower, extracts and concentrates, beverages, gummies, and vapes. It offers its products under the Tweed, 7ACRES, 7ACRES Craft Collective, DOJA, Ace Valley, Quatreau, Deep Space, First + Free, Surity Pro, Spectrum Therapeutics, Vert, Tokyo Smoke, Twd, Martha Stewart CBD, DNA Genetics, BioSteel, Storz & Bickel, This Works, HiWay, Simple Stash, Whisl, and Truverra brands. The company was formerly known as Tweed Marijuana Inc. and changed its name to Canopy Growth Corporation in September 2015. Canopy Growth Corporation was incorporated in 2009 and is headquartered in Smiths Falls, Canada.
Improved Free Cash Flow: Free cash outflow reduced by 79% year-over-year, down to CAD 12 million, reflecting enhanced working capital and lower SG&A
Revenue Growth in Cannabis: Canada adult-use cannabis revenue increased 43% year-over-year to CAD 27 million, reinforcing strong market positioning
Adjusted EBITDA Deterioration: Adjusted EBITDA loss widened by 60% year-over-year (from CAD 5 million in Q1 FY2025 to CAD 8 million in Q1 FY2026), primarily due to reduced margins
Gross Margin Decline: Consolidated gross margin dropped by 1,000 basis points (from 35% to 25%) year-over-year, signaling weaker profitability
Canopy Growth faces heightened risk from sustained margin pressures due to shifting consumer preferences toward lower-margin products and ongoing volatility in international cannabis and vaporizer demand, which could delay its path to profitability
| Entry Price | Support* | Target 1** | Target 2** |
|---|---|---|---|
| 1.44 | 1.32 | 1.52 | 1.6 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
**Target prices may vary by ±0.5% depending on market volatility.
Financial Performance Overview: Canopy Growth Corporation reported consolidated net revenue of CAD 72.1 million in Q1 FY2026, representing a 9% increase year-over-year compared to Q1 FY2025. The growth was primarily driven by strong performance in the Canada adult-use cannabis market, supported by medical cannabis demand in Canada and increased shipments into European markets. This growth was partly offset by lower revenues from Storz & Bickel vaporizers, reflecting a normalization in demand following strong prior-year sales.
Profitability and Cash Flow Trends: The Company’s gross margin declined to 25% in Q1 FY2026 from 35% in Q1 FY2025, due to lower vaporizer sales, a weaker contribution from Poland, and a consumer shift in Canada towards higher-cost manufactured cannabis products. Despite this margin pressure, the Company reported a 21% improvement in operating loss, amounting to CAD 23 million, reflecting the benefits of ongoing expense reductions. Free cash flow improved meaningfully, with an outflow of CAD 12 million, down 79% compared to the prior year, supported by lower SG&A and optimized working capital management.
Cost Reductions and Financial Discipline: Management emphasized its progress in cost containment, achieving CAD 17 million of the targeted CAD 20 million annualized savings since March 2025. SG&A expenses fell 21% year-over-year in Q1 FY2026, underscoring disciplined execution. The Company remains committed to enhancing gross margins and positioning itself for adjusted EBITDA profitability over the remainder of fiscal 2026.
Cannabis Segment Performance: In the cannabis business, Canada adult-use cannabis net revenue rose 43% to CAD 27 million, supported by strong consumer uptake of infused pre-roll joints under the Claybourne brand. Notably, infused pre-roll sales grew 58% sequentially versus Q4 FY2025, securing a top-three market position nationally. Canada medical cannabis revenues also increased 13% year-over-year, supported by higher insured customer volumes and larger order sizes. International cannabis revenue rose modestly by 4%, with stronger shipments to Europe partially offset by weaker performance in Australia.
Margin Challenges and Strategic Initiatives: Cannabis gross margins decreased to 24% from 33% in Q1 FY2025, reflecting consumer preference for higher-cost manufactured products and lower volumes in high-margin Poland. To address this, Canopy is implementing automation technology, expanding infused pre-roll production, and pursuing bulk cannabis sales in Canada and Europe, which are expected to support margin accretion in the second half of FY2026.
Storz & Bickel Business Update: Storz & Bickel reported CAD 15 million in revenue, down 25% year-over-year, with gross margins falling to 29% from 39%, driven by a less favorable geographic mix and subdued consumer demand. The business has initiated cost efficiencies, including in-house manufacturing and workforce reductions, to protect margins. A new vaporizer launch is planned for late 2025, expected to rejuvenate consumer demand and broaden product offerings.
Management Outlook: CEO Luc Mongeau highlighted momentum in adult-use cannabis and disciplined execution as drivers of top-line growth. Interim CFO Tom Stewart emphasized the continued focus on margin improvement, cost efficiency, and sustainable cash flow generation as essential steps towards achieving adjusted EBITDA profitability in FY2026.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Speculative Buy’ recommendation has been given on Canopy Growth Corporation. (NASDAQ: CGC) at the closing market price of USD 1.44, as on August 25, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Healthcare Industry: Drug Manufacturers - Specialty & Generic
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| CGC Canopy Growth Corp |
0.37 19.27% | 2.29 | - | - | 1.97 | 1.79 | 2.99 | -1.059 |
| ZTS Zoetis Inc |
1.55 1.27% | 123.81 | 40.18 | 30.96 | 10.67 | 17.60 | 11.27 | 26.18 |
| MKKGY Merck KGaA ADR |
-0.02 0.07% | 27.86 | 21.25 | 14.93 | 3.10 | 2.14 | 3.60 | 12.98 |
| MKGAF MERCK Kommanditgesellschaft auf Aktien |
- -% | 140.92 | 21.73 | 14.95 | 3.16 | 2.15 | 3.56 | 12.82 |
| TAK Takeda Pharmaceutical Co Ltd ADR |
0.32 2.18% | 14.79 | 32.67 | 11.53 | 0.01 | 0.87 | 0.02 | 0.07 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is August 25,2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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