Canopy Growth Corp (NYSE: CGC) is tumbling in the market today, trading on declines of more than 5%. The move comes after a highly regarded analyst weighed in with a bearish tone. Here’s what’s going on:
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Bank of America Sends CGC Tumbling
In a recent note, concerns about Canaopy Growth were brought to light. Unfortunately, the stock is trading in the red as a result.
The note came from Bank of America, who took a bearish stance, downgrading the stock from “buy” to “neutral”. The analyst, Christopher Carey cited a number of concerns about the stock’s potential growth ahead, reducing the price target on CGC from $46 to $27.
While the price target still implies an upside of more than 13% over Friday’s closing price, it is not the gains in multiples that others seem to be expecting. The concerns cited include:
- Slowdown In Canadian Cannabis – Many have been suggesting that growth in the Canadian cannabis space is likely to stall. Carey sees this happening sooner rather than later, expecting that growth in the sector will either slow down or fall flat in the second half of 2019.
- Vaping Concerns – Vaping is no longer the cool kid on the block. Unfortunately, several consumers have been hospitalized with vape-related illnesses, some of which claimed the lives of their hosts. Vape cartridges are an important part of the cannabis industry and Carey expects that the continued concerns surrounding vaping will lead to further slowing in the sector.
Why These Concerns Are Very Real
Often times, investors will react to an upgrade or downgrade on the day of, then largely forget the message that the move was meant to send. Doing this when it comes to CGC stock could be a very dangerous move. Here are 3 reasons that investors should pay close attention to this warning from Bank of America:
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