Canadian-based Canopy Growth (TWMJF) delivered a 107% jump in revenues for the second quarter ending September 30, 2017. Revenues of C$17.6 million increased over last year’s C$8.5 million for the same time period. This was also an 11% increase sequentially over the fiscal first quarter revenues of C$15.9 million.
Canopy Growth still reported a net loss of C$1.6 million for the quarter or one cent per diluted share, but that figure is much lower than last year’s C$5.4 million or five cents per diluted share. The company said that management believes ongoing spending to expand the production platform is a prudent investment in the company’s long-term health.
The company sold 2,020 kilograms of cannabis product for the quarter, which was a 74% increase over last year and a 10% increase sequentially. The average cost per gram before shipping and fulfillment was $1.25, a drop from the previous cost of $1.27 per gram. The company statement read, “The cost per gram also reflects value-add processing for cannabis oils and sector-exclusive Softgel capsules, both carrying significantly higher margins than dried flower product. The weighted average cost per gram to the point of harvest fell to only $0.72 per gram, the fifth consecutive quarter when the cost to the point of the harvest was less than $1 per gram and declined from the previous quarter.”
Constellation Brands Investment Was The Biggest News
Of course, the biggest news of the quarter was the new strategic relationship with Constellation Brands (STZ). The beverage giant has invested C$245 million ($190 million) in exchange for a 9.9% stake in Canopy Growth to develop new cannabis-infused beverages.
“With our objective to win and retain significant future market share, and backed by the recent $245 million investment from Constellation, we remain focused on the expansion of our cultivation capacity, the extraction platform and finished branded products programs,” said Bruce Linton, Chairman & CEO. “The historic cannabis supply MOU that we signed during the second quarter with the province of New Brunswick confirmed our long‑held belief that investment in brands, quality, and scale coupled with investing in the people and communities we believe in across Canada would leave us well positioned to serve provincial supply needs. We are hopeful to see more and more provinces make similar decisions to pursue the most reliable, varied and high-quality products available in the sector.”
The stock was rising by 1% to trade at $15.99, near its 52-week high of $16.98. According to Yahoo! Finance, 10 analysts cover Canopy Growth with an average target price of $14.99. All of the analysts have buy ratings except one with a sell and one person has a hold rating.