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Piper Jaffray: Canopy Growth Stock Best Way to Play Pot Boom

Piper Jaffray: Canopy Growth Stock Best Way to Play Pot Boom
(Eldadcarin/Dreamstime)

Monday, 15 April 2019 09:40 AM

Piper Jaffray recently predicted the marijuana industry ramping is poised to grow at a healthy clip and suggests a Canadian cannabis firm is a good bet for investors to pounce on now.

Canopy Growth stock (CGC) rose Friday to $42.29 after the boost from the Piper Jaffray advice, Barron’s reported.

Piper analyst Michael Lavery reiterated an Overweight rating on Canopy and a $60 price target, as he sees it in a sweet spot in an evolving industry. “Capacity, scale and execution will continue to matter for the next 12-24 months as growing supply catches up with strong demand in both Europe and Canada, and we consider Canopy well positioned relative to its peers on these measures,” he wrote.

For now, Canopy Growth is one of the few companies that can trade on major U.S. exchanges, as it operates only in Canada. (Because of the U.S.’s federal prohibition, pot companies that have business in the U.S. are excluded.)

Lavery expects expect “brands and the related pricing power to shape the category, with more value-added differentiated products (edibles, vapes, or beverages) potentially playing a key role.”

Meanwhile, more big-name investors are beginning to embrace the marijuana industry.

For example, last month Canada’s Aurora Cannabis Inc. tapped billionaire Nelson Peltz as a strategic adviser, betting on the consumer industry-focused veteran to help the recreational marijuana maker chart its expansion into new markets.

Peltz brings a network of relationships with large potential strategic companies that Aurora could partner with across medical and consumer applications, Cowen and Company analysts said in a note.

His appointment comes weeks after rival Canopy Growth Corp appointed lifestyle guru Martha Stewart to help develop and launch a line of pot-based products, Reuters explained.

Aurora, the second biggest cannabis producer by market value, has also been looking beyond recreational marijuana to drive sales, especially after the legalization of hemp, which was part of 2018 U.S. farm bill.

Hemp, a cannabis plant with no or extremely low concentrations of “high” inducing compound, can be used in foods, organic body care and clothing, among others.

“Canadian licensed producers, and Aurora in particular, are well positioned to lead in the development of the international cannabis industry,” Peltz said in a statement.

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Piper Jaffray recently predicted the marijuana industry ramping is poised to grow at a healthy clip and suggests a Canadian cannabis firm is a good bet for investors to pounce on now.
piper jaffray, canopy, growth, stock, pot, marijuana
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2019-40-15
Monday, 15 April 2019 09:40 AM
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