Can European Buyouts Aid Canopy Growth's (CGC) Q2 Earnings?

Canopy Growth Corporation's (NYSE:CGC) European business has been gaining momentum on the back of several strategic investments and planned executions of policies.

We expect this strength to get reflected in second-quarter fiscal 2020 results, scheduled for release on Nov 14, after market close.

Click here to know how the company is likely to perform in the quarter to be reported.

European Investments: A Strategic Fit?

Canopy Growth is spending on its outside Canada business to tap into its huge market potential globally. In recent times, the company acquired a number of European companies to extend and fortify its production footprint in the region that holds great promises. Strong top-line contributions from these buyouts deserve special mention in the company’s upcoming earnings results.

In 2019, this Zacks Rank #3 (Hold) stock bought Germany-based C3, which is Europe’s largest cannabinoid-based pharmaceuticals company with five approved cannabinoid therapies to its credit. The transaction enabled Canopy Growth to provide European physicians with the knowledge and therapies drawn from synthetic and naturally-derived cannabinoid-based medicines.

Canopy Growth Corporation Price and EPS Surprise

Canopy Growth Corporation price-eps-surprise | Canopy Growth Corporation Quote

In April this year, the company also purchased Spain-based licensed cannabis producer Cáñamo y Fibras Naturales, S.L. (Cafina). As one of the three Spanish companies authorized to cultivate, distribute and export cannabis containing more than 0.2% of tetrahydrocannabinol (THC) for medicinal and research purpose, Cafina spurred tremendous growth prospects for Canopy Growth.

In May 2019, the company again made a strategic move in Europe with the acquisition of England-based This Works. The integration of this natural skincare and sleep solutions provider helped Canopy Growth consolidate its ability to penetrate the unexplored markets and introduce cannabidiol or CBD-based offerings that align with a well-established 34-plus country channel.

Further in June, the company took over Saskatoon-based bio-product extractor KeyLeaf Life Sciences to support the company’s U.S. cannabidiol (CBD) expansion.

All the above acquisitions might have significantly favored the company’s top line in the fiscal second quarter.

Additionally, of late, the company made some substantial infrastructure-related improvements for higher product flow into the European markets including Germany, Poland, the Czech Republic and the United Kingdom. These initiatives include a considerable increase in pre-pack and fulfilment capacity to ensure rapid product flow into the pharmacy channel. We expect positive outcomes of these efforts in the to-be-reported results.

Stocks Worth a Look

Here are a few medical stocks worth considering as these have the right combination of elements to beat on earnings in the to-be-reported quarter.

Eyenovia, Inc. (NASDAQ:EYEN) has an Earnings ESPof +10.50% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Merus N.V. (NASDAQ:MRUS) has an Earnings ESP of +10.00% and a Zacks Rank #3 (Hold).

Prevail Therapeutics Inc. (NASDAQ:PRVL) has an Earnings ESP of +4.48% and a Zacks Rank of 2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>