IB Net Payout Yields Model

Canopy Growth: Constellation Bid Appears Unlikely, For Now

Canopy Growth rallied 14% on the hiring of the CFO from Constellation Brands on the hopes of a bid.
Constellation Brands has a large debt position suggesting a large bid is highly unlikely.
An executive void during the Cannabis 2.0 rollout is an unwelcome outcome of hiring a new CEO.
The price target remains $10, or roughly 5x EV/FY20 sales target.
Canopy Growth (CGC) finally hiring a new CEO is not the recipe for a stock rally in an expensive stock. In addition, Constellation Brands (STZ) isn't likely to launch a takeover bid costing upwards of $10 billion when the company lacks the cash. My previous investment thesis placing the stock at $10 remains intact with the further delayed rollout of Cannabis 2.0 and a new CEO not starting until January.
Read the full article on Seeking Alpha. 
Update - December 11, 2019
The stock is trying to hold $20. A positive plug from Cramer today is helping Canopy Growth, but investors should consider the lack of rally as a negative sign here.

Disclosure: No position mentioned. Please review the disclaimer page for more details. 


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