CGC stock continues to move lower, hitting a new low on Thursday after Canopy Growth (TSX:WEED) (NYSE:CGC) reached an all-cash transaction to purchase a majority stake in BioSteel Sports Nutrition Inc.
The last few months may have been a pretty tough period for most of the cannabis companies in the industry, but the biggest companies have continued to work on ways to further expand their businesses. Canopy Growth is among the largest names in the business and today the company announced that it has acquired a majority stake in BioSteel Sports Nutrition Inc. Considering the full scope of the CBD-based beverage market, the decision from Canopy is understandable.
Canopy has picked up a 72% stake in the company, and it has been reported that eventually, the company could acquire BioSteel in its entirety.
The financial details of the deal have not been revealed yet. However, the significance of the deal for Canopy is profound. Due to this stake purchase, the company has now got a toehold in the lucrative sports nutrition and hydration space, which is going to grow at an impressive pace in the coming years.
So why aren’t investors feeling this deal? At the time of writing, CGC stock is down 3.50% at $21.13 after hitting a new low of $20.52 earlier in the session.
Mark Zekulin, the Chief Executive Officer of Canopy, touched on the positive: “This acquisition allows us to enter the sports nutrition space with a strong and growing brand as we continue towards a regulated market of food and beverage products that contain cannabis.”
Will investors get on board eventually?
One Analyst is Bullish
All this now brings to attention to CGC stock. Like many other pot stocks, Canopy Growth has also been beaten down over the past few months. Even if investors aren’t currently feeling the BioSteel Sports Nutrition deal, there are experts and industry watchers who believe that this stock is still an attractive one despite its recent plunge.
Michael Lavery of Piper Jaffray has stated that CGC stock is still a BUY. He argues that due to its size, it is a company that has the capability of navigating a tough industry for a longer period than many of its peers. That being said, he did cut his forecast with regards to sales and also revised his target price from $49 USD to $40 USD. However, he still rates the stock as ‘overweight.’
CGC stock has lost over 60% since late April due to weakness in the cannabis sector.
What do you think about the latest Canopy Growth news?
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