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What's in Store for Canopy Growth (CGC) in Q2 Earnings?
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Canopy Growth Corporation (CGC - Free Report) is scheduled to report second-quarter fiscal 2024 results shortly.
In the first quarter of fiscal 2024, the company reported a much narrower loss of 4 cents compared with the Zacks Consensus Estimate of a loss of 10 cents per share. Canopy Growth missed estimates in three of the trailing four quarters and surpassed in one, the average negative surprise being 64.12%.
Let's take a look at how things have shaped up prior to this announcement.
Factors at Play
We expect Canopy Growth to experience consistent demand for adult-use cannabis products in the second quarter of fiscal 2024, driven by the strong resurgence in the Tweed brand. In the fiscal first quarter, the Tweed brand moved 19 places up to the eighth rank within the total flower segment of the Canadian adult-use cannabis market. Moreover, continued gains of the iconic brand in the larger markets of British Columbia, Alberta and Ontario must have aided the company’s top line.
With the addition of Wana, Canopy Growth is likely to have made progress in the to-be-reported quarter in positioning itself as Canada's leading edibles company. CGC developed an ambitious brand growth strategy in the first quarter, which includes selling Wana-branded gummies to registered medical cannabis patients through Canopy’s primary medical brand, Spectrum Therapeutics. In the second quarter of fiscal 2024, we assume the company to have witnessed strong demand and is likely to have delivered more industry-leading innovation to drive the brand's leadership in the Canadian cannabis market.
Meanwhile, we expect Canopy Growth to have made significant investments in Biosteel to sustain the brand’s continued record top-line growth. In the second quarter of fiscal 2024, revenues from the Biosteel reporting unit are expected to have partially benefited from the company’s continued drive on the food, drive and mass market channels in Canada. Within the United States, CGC intends to tighten the brand’s geographical focus on prioritizing key markets, including the central, northeast and southeast regions.
Further, revenues from Canopy Growth’s leading vaporizer brand, Storz & Bickel, are likely to have benefited from the expansion of its distribution and retail channels in the United States. Historically, Storz & Bickel has experienced significant growth following the launch of new products, and we assume these benefits to have extended in the to-be-reported quarter as well. We also remain upbeat regarding the company’s progress with a new line of innovative Storz & Bickel vaporizers in the fiscal second quarter.
In addition, the company’s U.S. cannabis businesses must have continued to drive brand growth in the fiscal second quarter, leveraging the asset-light expansion strategy. In July 2023, the Jetty brand’s expansion into the Colorado and New York markets brought its award-winning vape products to its third U.S. market after more than a decade of leadership in California.
Through a collaboration with Surterra Wellness in Florida, Wana products from the brand’s premium cannabis-infused gummies lineup are now available across Florida, which marks the 15th active U.S. state or territory in which Wana cannabis edibles are sold. These developments must have contributed to the company’s top line in the fiscal second quarter. Apart from these individual growth strategies, Canopy USA ecosystem companies must have continued to develop more collaborative opportunities and synergies.
Throughout fiscal 2023, Canopy Growth has streamlined and simplified its businesses by undertaking several initiatives. The company’s transformation to a simplified asset-light model has already started to yield significant cost savings, advancing on the path to achieving positive adjusted EBITDA in cannabis businesses on exiting fiscal 2024. Meanwhile, in the to-be-reported quarter, the Storz & Bickel brand is expected to be impacted by seasonality, with lower sales and profit compared to the fiscal first quarter. We expect this to have affected CGC’s revenues in the second quarter.
Q2 Estimates
The Zacks Consensus Estimate for Canopy Growth’s second-quarter fiscal 2024 revenues is pegged at $73.9 million, suggesting a fall of 18.2% from the year-ago reported figure.
The Zacks Consensus Estimate for its second-quarter fiscal 2024 loss stands at 13 cents per share, 53.6% wider than the year-ago reported figure.
What Our Model Suggests
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, has a higher chance of beating estimates. However, that is not the case here, as you can see below:
Earnings ESP: Canopy Growth has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently sports a Zacks Rank #1.
Stocks Worth a Look
Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.
Insulet has a long-term expected earnings growth rate of 35.7%. PODD has an earnings yield of 1.13% against the industry’s -2.58%.
Acadia Pharmaceuticals (ACAD - Free Report) has an Earnings ESP of +6.76% and a Zacks Rank #2. The company is scheduled to release third-quarter 2023 results on Nov 2.
ACAD has an expected long-term earnings growth rate of 43.4%. In the trailing four quarters, the company delivered an average earnings surprise of 20.33%.
Dentsply Sirona (XRAY - Free Report) currently has an Earnings ESP of +1.85% and a Zacks Rank #2. The company is scheduled to release its third-quarter 2023 results on Nov 2.
Dentsply Sirona has an expected earnings growth rate of 14.7% for the next year. XRAY’s earnings beat estimates in three of the trailing four quarters, the average surprise being 12.51%.
Image: Bigstock
What's in Store for Canopy Growth (CGC) in Q2 Earnings?
Canopy Growth Corporation (CGC - Free Report) is scheduled to report second-quarter fiscal 2024 results shortly.
In the first quarter of fiscal 2024, the company reported a much narrower loss of 4 cents compared with the Zacks Consensus Estimate of a loss of 10 cents per share. Canopy Growth missed estimates in three of the trailing four quarters and surpassed in one, the average negative surprise being 64.12%.
Let's take a look at how things have shaped up prior to this announcement.
Factors at Play
We expect Canopy Growth to experience consistent demand for adult-use cannabis products in the second quarter of fiscal 2024, driven by the strong resurgence in the Tweed brand. In the fiscal first quarter, the Tweed brand moved 19 places up to the eighth rank within the total flower segment of the Canadian adult-use cannabis market. Moreover, continued gains of the iconic brand in the larger markets of British Columbia, Alberta and Ontario must have aided the company’s top line.
Canopy Growth Corporation Price and EPS Surprise
Canopy Growth Corporation price-eps-surprise | Canopy Growth Corporation Quote
With the addition of Wana, Canopy Growth is likely to have made progress in the to-be-reported quarter in positioning itself as Canada's leading edibles company. CGC developed an ambitious brand growth strategy in the first quarter, which includes selling Wana-branded gummies to registered medical cannabis patients through Canopy’s primary medical brand, Spectrum Therapeutics. In the second quarter of fiscal 2024, we assume the company to have witnessed strong demand and is likely to have delivered more industry-leading innovation to drive the brand's leadership in the Canadian cannabis market.
Meanwhile, we expect Canopy Growth to have made significant investments in Biosteel to sustain the brand’s continued record top-line growth. In the second quarter of fiscal 2024, revenues from the Biosteel reporting unit are expected to have partially benefited from the company’s continued drive on the food, drive and mass market channels in Canada. Within the United States, CGC intends to tighten the brand’s geographical focus on prioritizing key markets, including the central, northeast and southeast regions.
Further, revenues from Canopy Growth’s leading vaporizer brand, Storz & Bickel, are likely to have benefited from the expansion of its distribution and retail channels in the United States. Historically, Storz & Bickel has experienced significant growth following the launch of new products, and we assume these benefits to have extended in the to-be-reported quarter as well. We also remain upbeat regarding the company’s progress with a new line of innovative Storz & Bickel vaporizers in the fiscal second quarter.
In addition, the company’s U.S. cannabis businesses must have continued to drive brand growth in the fiscal second quarter, leveraging the asset-light expansion strategy. In July 2023, the Jetty brand’s expansion into the Colorado and New York markets brought its award-winning vape products to its third U.S. market after more than a decade of leadership in California.
Through a collaboration with Surterra Wellness in Florida, Wana products from the brand’s premium cannabis-infused gummies lineup are now available across Florida, which marks the 15th active U.S. state or territory in which Wana cannabis edibles are sold. These developments must have contributed to the company’s top line in the fiscal second quarter. Apart from these individual growth strategies, Canopy USA ecosystem companies must have continued to develop more collaborative opportunities and synergies.
Throughout fiscal 2023, Canopy Growth has streamlined and simplified its businesses by undertaking several initiatives. The company’s transformation to a simplified asset-light model has already started to yield significant cost savings, advancing on the path to achieving positive adjusted EBITDA in cannabis businesses on exiting fiscal 2024. Meanwhile, in the to-be-reported quarter, the Storz & Bickel brand is expected to be impacted by seasonality, with lower sales and profit compared to the fiscal first quarter. We expect this to have affected CGC’s revenues in the second quarter.
Q2 Estimates
The Zacks Consensus Estimate for Canopy Growth’s second-quarter fiscal 2024 revenues is pegged at $73.9 million, suggesting a fall of 18.2% from the year-ago reported figure.
The Zacks Consensus Estimate for its second-quarter fiscal 2024 loss stands at 13 cents per share, 53.6% wider than the year-ago reported figure.
What Our Model Suggests
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, has a higher chance of beating estimates. However, that is not the case here, as you can see below:
Earnings ESP: Canopy Growth has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently sports a Zacks Rank #1.
Stocks Worth a Look
Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.
Insulet (PODD - Free Report) has an Earnings ESP of +6.61% and a Zacks Rank #2. The company will release third-quarter 2023 results on Nov 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Insulet has a long-term expected earnings growth rate of 35.7%. PODD has an earnings yield of 1.13% against the industry’s -2.58%.
Acadia Pharmaceuticals (ACAD - Free Report) has an Earnings ESP of +6.76% and a Zacks Rank #2. The company is scheduled to release third-quarter 2023 results on Nov 2.
ACAD has an expected long-term earnings growth rate of 43.4%. In the trailing four quarters, the company delivered an average earnings surprise of 20.33%.
Dentsply Sirona (XRAY - Free Report) currently has an Earnings ESP of +1.85% and a Zacks Rank #2. The company is scheduled to release its third-quarter 2023 results on Nov 2.
Dentsply Sirona has an expected earnings growth rate of 14.7% for the next year. XRAY’s earnings beat estimates in three of the trailing four quarters, the average surprise being 12.51%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.