Canopy Growth, the Canadian cannabis company, reported second-quarter fiscal 2020 earnings Thursday that missed analyst expectations.
Shares fell as much as 17.57% Thursday following the report.
Canopy Growth has struggled to make gains following multiple quarters of weak earnings. Still, the company said in its release that there are signs of growth in retail and medical sales.
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Canopy Growth keeps sliding.
Shares of the Canadian marijuana company fell as much as 17.57% Thursday after the company reported second-quarter fiscal 2020 earnings that showed a much wider-than-expected loss and disappointing revenue.
Here’s what the company reported (in Canadian dollars), versus what analysts surveyed by Bloomberg expected:
Adjusted loss per share: loss of $1.08 reported versus loss of 39 cents (expected)
Revenue: $76.6 million reported versus $102.3 million (expected)
The company took a C$32.7 million restructuring hit in the second-quarter for returns, return provisions, and pricing allowances, the company said in a release. Canopy Growth also took a C$15.4 million inventory charge in the quarter to “align the portfolio with the new strategy.”
“The last two quarters have been challenging for the Canadian cannabis sector as provinces have reduced purchases to lower inventory levels, retail store openings have fallen short of expectations, and Cannabis 2.0 products are yet to come to market,” said Mark Zekulin, CEO of Canopy Growth, in a prepared statement.
Zekulin went on to say that the conditions are a “short-term headwind” in a new industry, where Canopy Growth is still the best positioned for growth. In addition, he said that the company “took the necessary steps to address inventory levels on our oils and softgels.”
He also highlighted areas of success during the quarter, saying retail sales are growing, and Canadian medical revenues are up, as are international medical sales.
Canopy Growth has struggled to make gains in the market this year amid multiple disappointing earnings releases. Still, the company’s investments toward growth seem to be an “underappreciated competitive advantage for the company,” wrote W. Andrew Carter of Stifel in a note Thursday.
That advantage could manifest in a stronger position for Canopy Growth when the category accelerates, Carter wrote.
Wall Street has a consensus price target of $30.21 for Canopy Growth, and the company has 11 “buy” ratings, 12 “hold” ratings, and one “sell” rating, according to Bloomberg data.
Shares of Canopy Growth are down 43% this year.