Shares in Canopy Growth Corp (TSE:WEED) (NYSE:CGC) moved higher Friday after Piper Jaffray raised its stock price target on the Canadian cannabis company, saying it is “well positioned” in the emerging and growing market.
MarketWatch reported that analysts Michael Lavery and Jeffrey Kratky raised their target late Thursday to $60 from $40 and reiterated their overweight rating on Canopy.
Canopy's US-listed shares were up 3.6% to $45.78 before the opening bell in New York.
READ: Canada's Canopy Growth shares bloom as it receives license to develop industrial hemp in New York
Piper is expecting the global cannabis market to be worth $250 billion to $500 billion in the long term and to be worth $15 billion to be $50 billion near term.
"We believe the long-term growth can be significant — both from transitioning illicit trade to legal sales, medical sales, and from transitioning sales in health & wellness categories to CBD-infused products," they wrote in a note to clients.
Canopy’s hemp ambitions were bolstered with the receipt of a license from New York state to grow and process the plant.
Hemp does not contain the psychoactive ingredient associated with cannabis but does contain CBD (or cannabidiol), which is of increasing interest to consumers as it is believed to combat a range of health problems, including stress and sleep disorders.
The analysts said Canopy's recent success in receiving a legal hemp license in New York is "a tangible first step forward in the US that points to the beginning of a long US growth trajectory."
Canopy wants to establish a large-scale production center in New York state and it is currently evaluating a number of sites in the Southern Tier. It will be the first such facility outside Canada.
Canopy said it plans to invest between $100 million and $150 million in the site, which will be able to generate tons of hemp extracts a year.
“The analysts nonetheless trimmed their estimates for an initial sales build. They are now expecting 10,000 kg sold for Canopy in the Canadian recreational market in its fiscal third quarter, down from 14,000 kg, or for C$87 million ($65.3 million),” reported Market Watch.
Hemp also has industrial applications and Canopy wants to establish a large-scale production center in the state and it is currently evaluating a number of sites in the Southern Tier. It will be the first such facility outside Canada.
Canopy said it plans to invest between US$100 million and US$150 million in the site, which will be able to generate tons of hemp extract a year.
New York-based beverage group Constellation Brands Inc (NYSE:STZ), whose shares are up 1.2% at $161, recently invested $4 billion into Canopy, raising its stake to 37% as it becomes bullish on the future of the cannabis industry.
Contact Uttara Choudhury at [email protected]