Canopy Earnings: Putting Shares Under Review Amid Transformation Plan and Increased Risk of Dilution

We are placing no-moat Canopy shares under our review as we update our long-term forecast for the continued challenges in the Canadian legal cannabis market as well as the company’s transformational business plans in response. We expect to materially cut our fair value estimates of $6 and CAD 8 per share respectively, as well as reassess our Standard Capital Allocation and Very High Uncertainty Ratings. Shares have fallen nearly 75% year-to-date, far more than the 25%-40% drop the other Canadian licensed producers we cover have experienced.