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After a 60% drop in 6 months, Bank of America says buy pot stock Canopy

Canopy Growth
Tom Franck | CNBC

With shares down more than 60% over the last six months, it's tough to remain pessimistic on marijuana grower Canopy Growth, according to Bank of America Merrill Lynch.

The brokerage upgraded the Canadian cannabis producer to buy from neutral on Wednesday and told clients that the stock's 2019 swoon has tempered valuation and earnings estimates to more reasonable levels.

"Street estimates [are] achievable (even beatable) for maybe the first time in Canopy's history as a public company," analyst Christopher Carey wrote in a note. With leaner channel inventory and improving retail data ahead, "a bear case based on multiple compression and to a certain extent cash burn (despite still years of cash) seems less robust now."

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