On Feb. 10, I said that Canopy Growth stock looked expensive and that investors should wait for a pullback. On Feb. 10, CGC stock hit a 52-week high of $52.17. Since then, the stock has declined by 63 percent to trade at the current $19.1 per share level. Is the current pullback a good opportunity to buy the stock or is there still more downside?
Currently, CGC the stock trades at an NTM EV-to-revenue multiple of almost 11x compared to a multiple of around 30x in February. Tilray, Hexo, and Aurora Cannabis have multiples of 8.6x, 3.7x, and 6.9x, respectively. While Canopy Growth stock’s valuation looks expensive compared to its peers, the premium is somewhat justified. However, Canopy Growth’s multiple looks much more reasonable compared to its historical multiple, which priced in too much optimism. While federal legalization would certainly be a very big catalyst not only for CGC but for the sector as a whole, CGC has other things going for it until that happens. As the company gets closer to profitability, its multiple should get re-rated higher.
View more information: https://marketrealist.com/p/is-canopy-growth-buy-sell-hold/