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Cannabis sales data released earlier this week by Statistics Canada for January and February supports a more constructive view of the cannabis market in 2020, according to Cantor Fitzgerald.
Cannabis 2.0 Well-Received In Canada
Analyst Pablo Zuanic said the pre-COVID trends were encouraging, with 4% sequential growth in both January and February, adding that there is potential for growth to accelerate in the year ahead.
More stores opened after the availability of edible and ingestible cannabis products, referred to as Cannabis 2.0 products, the analyst said.
In April, there were already 1.5 times the number of stores open than in November, and the Canadian market got a boost from 2.0 bans being lifted in key provinces, he said.
If the coronavirus-related store closures had not occurred, the Canadian consumer cannabis market would have easily been on track to recording sales of up to CA$2.5 billion ($1.7 billion) in sales, ahead of Cantor’s CA$2.1-billion estimate, Zuanic said.
Sales could decline to at least the low teens while shelter-in-place restrictions continue, the analyst said.
Zuanic named Aphria Inc (NYSE: APHA) as Cantor's top pick among Canadian licensed producers, but recommended entering the stock on an LP sector pullback.
Aphria is a “close second” to Canopy Growth Corp (NYSE: CGC), he said.
Cantor has an Overweight rating on Aphria and a Neutral rating on Canopy Growth.
APHA, CGC Price Action
Aphria shares were up 3.39% at $3.51 at the time of publication Friday, while Canopy Growth shares were higher by 3.17% at $15.30.
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