Constellation Brands Inc. (NYSE:STZ) Gives Canadian Cannabis Company Legitimacy and Cash
$STZ, $CGC, $ACBFF
Canopy Growth Corp.’s (CGC) CEO, Bruce Linton expects 1 “Google-like company” to dominate the legal cannabis industry.
Canopy’s transformative deal with Constellation Brands Inc. (NYSE:STZ) has given it legitimacy, clout and a cash hoard that has widened the gap with its competitors.
Note: Constlation Brands is the brewer of Corona Beer, and is planing a cannabis infused line fbeverages,
The deal has boosted Canopy’s stock 56% since Constellation’s $3.8-B investment for a 38% stake was announced last week. That brings its market value to about $9-B, in the same league as plane maker Bombardier Inc. and retailer Canadian Tire Corp. and a fed billion more than its nearest competitor Aurora Cannabis Inc (OTCMKT:ACBFF)
Canopy is now the biggest company on Canada’s increasingly cannabis-dominated healthcare index, surpassing Bausch Health Cos., the former Valeant Pharmaceuticals, for the 1st time Monday.
After the Constellation deal, Canopy will have 12X more cash than any of its Canadian competitors and almost as much cash on hand as the approximately $5.5-B that has been raised in the entire Canadian cannabis industry to date, according to analyst at Canaccord Genuity Group Inc.
The company had $500-M in cash and equivalents at the end of 2-Quarter bringing its total potential cash pile to about $4.3-B when adding the Constellation infusion.
With the $4-B+ added to the balance sheet later in October, we believe Canopy is now best suited to expand it platform further.
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