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CAN: Profit concerns persist in the cannabis space

The four largest Canadian pot companies by market value will report results for the quarter ended Sept. 30 this week and the expectations are low. This doesn’t bode well for stock prices, which are already down nearly 60 per cent for the sector from recent highs in March.

Much like recent quarters, investors are likely to be laser-focused on “timetables toward Ebitda profitability,” which probably isn’t in the cards until 2020 or 2021, according to Bloomberg Intelligence analyst Kenneth Shea.

Bank of Montreal analyst Tamy Chen expects industrywide sales to Canada’s provincial wholesalers to decline 20 per cent quarter-over-quarter amid a slow rollout of retail storefronts that has left them sitting on too much inventory from licensed producers, or LPs.

This raises the risk that provinces will return some product to companies, which may also be facing inventory writedowns, she wrote in a recent note.

Read more at bnnbloomberg.ca

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