Employees work at the Canopy Growth facility in Smith Falls, Ontario, Canada, December 19, 2017.
Chris Roussakis | Bloomberg | Getty Images
Canopy Growth shares rose Tuesday after the Canadian cannabis company said it expects to be profitable in the second half of 2022.
“We are building a track record of winning in our core markets, while also accelerating our US growth strategy with the momentum behind the promising cannabis reform in the US,” David Klein, CEO of Canopy Growth, said in a statement Tuesday.
Canopy shares closed Tuesday, up 11.9% to $ 49.09. The stock is up about 149% in the past year, bringing its market value to over $ 17.1 billion. During Tuesday’s trading, the stock rose to a 52-week high of $ 50.92.
Previously, the company reported that third-quarter sales were up 23% from a year ago, to $ 153 million Canadian dollars ($ 120 million), driven by increased sales of recreational products in Canada and medical cannabis in international markets .
Canopy’s loss amounted to C $ 829 million (US $ 653 million), or C $ 2.43 per share, from a loss of C $ 109.6 million, or 26 cents a share, a year ago.
The company said it has tried to improve its profitability by cutting costs and controlling expenditures. These efforts, combined with the expected increases in demand, should help her make a profit later next year.
Over the next 12 to 18 months, Canopy expects to cut its costs by as much as C $ 200 million.
With the new Biden administration, Canopy Growth is optimistic about the prospects of US cannabis legalization, and says it expects to hit the market this year.
“We expect this legislation will include comprehensive reforms to ensure restorative justice, protect public health and introduce responsible taxation while ending cannabis prohibition,” Klein said in an earnings appeal.
According to Owen Bennett, an equity analyst at Jefferies Group, Canopy Growth continues to position itself as the leading US cannabis company for short-term legislative reform after acquiring ownership in Acreage and an interest in TerraAscend.
Bennett also cited his Martha Stewart CBD product line, already outperforming 94% of all US CBD brands, just four months after launch, as another factor. The brand recently added CBD pet products.
Canopy Growth has announced its medium-term financial targets, with annual compound revenue estimated to increase between 40% and 50% between fiscal years 2022 and 2024. In addition, the company expects to achieve positive operating cash flow in fiscal year 2023 and a positive free for the 2024 financial year.