Cowen trims some pot companies sales estimates, price targets

Sales forecasts for some of Canada’s biggest cannabis producers were revised lower by one analyst as the pace of sales growth in Canada’s cannabis industry continues to slow down.

Cowen & Co. Analyst Vivien Azer said in a report to clients Tuesday that the 21 per cent growth in industry sales observed in the second quarter of this year declined two percentage points compared to the same quarter a year earlier. That’s seen as a slight improvement from slowdowns in prior quarters and offers a potential sign of stabilization in the Canadian cannabis market despite the hyper-competitive state the industry operates in.

Canadian cannabis sales totalled $1.1 billion in the second quarter of the year, compared to $916 million a year earlier, according to Statistics Canada. It was also up eight per cent from $1.03 billion in the first quarter of 2022, the StatsCan data showed.

However, Azer noted that the Canadian cannabis marketplace remains “highly competitive and fragmented” with the country’s biggest producers Tilray Brands Inc., Canopy Growth Corp., and Hexo Corp. poised to report double-digit sales declines in the second quarter and have lost a total of 25 percentage points of market share, according to analysis done by Cowen. Azer said those trends contrast with market share gains for Organigram Holdings Inc. – whose focus on the “value” segment has seen it jump ahead of Canopy for third place in the Canadian market – as well as Auxly Cannabis Inc., which has focused mainly on Cannabis 2.0 products like vapes and extracts.