Bank of America (NYSE: BAC) says it’s time for investors to buy shares of Canopy Growth (NYSE: CGC). The investment bank upgraded Canopy to buy from neutral on Wednesday, prompting a 15% surge in the price of the popular cannabis stock.
Bank of America downgraded Canopy’s shares two months ago. At the time, the bank’s analysts were concerned that Wall Street’s earnings estimates for the marijuana company were too high. They correctly predicted that a lack of retail stores and rising inventory levels would lead Canadian provinces to pull back on their cannabis orders, denting Canopy’s results in the process.
Earlier this month, Canopy’s fiscal 2020 second-quarter revenue and earnings fell well short of Wall Street’s expectations. It produced net revenue of $57.8 million, down sharply from $68.3 million in the first quarter. That was significantly below consensus estimates, which had called for revenue of $68.4 million. Canopy also delivered a worse-than-expected net loss of $282.7 million, or $0.81 per share. Wall Street had anticipated a loss of only $0.31 per share.
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