Cannabis Stock CGC Rallies 39% in Three Months: Time to Buy or Sell?

Canopy Growth Corporation CGC has staged a strong rally in the past three months, all thanks to its aggressive restructuring efforts aimed at cutting costs and steering the company toward profitability.

While revenue trends remain under pressure, early signs of margin improvement and debt reduction have renewed investor interest in the Canada-based cannabis operator.

Let’s delve into the company’s fundamentals to gain a better understanding of how to play the stock amid this price increase.

Canopy’s Bet on Medical Cannabis & Operational Discipline

Over the past two years, Canopy Growth has been streamlining operations by exiting lower-margin businesses and selling non-core assets in order to boost liquidity, reduce operating expenses and clear its path toward profitability. A key focus has been unifying its medical cannabis operations globally and sharpening commercial execution in Canada’s adult-use market.

Early results suggest that this strategy is gaining traction, particularly in medical cannabis. In fiscal 2025 (ended March 2025), Canadian medical cannabis net revenues rose 16% year over year to C$77 million, driven primarily by a larger average order size. In Q4 alone, revenues from this segment helped offset weakness in adult-use flower and pre-roll sales.

Internationally, medical cannabis sales dipped 4% for the year to C$39 million, with declines in Australia partially offset by improving sales in Germany and Poland. Meanwhile, Canopy’s vaporizer unit, Storz & Bickel, continues to be a vital contributor. Though Q4 sales were soft, full-year revenues grew 4% to C$73 million, led by strong demand for the Venty device.

Restructuring efforts have begun to reflect in improved margins and bottom-line performance. While fiscal 2025 gross margins rose 300 basis points (bps) over the year-ago period, adjusted EBITDA improved by 39% year over year. The company also reduced its total debt by 49% during the full year.

Looking ahead, Canopy plans to scale its global medical platform and boost Canadian profitability by focusing on high-margin formats like vapes, pre-rolls, and high-THC flower. Storz & Bickel is set to support margins through efficiencies and a new device launch. Additionally, Canopy aims to save at least C$20 million in annualized savings over the next 12-18 months through further SG&A reductions. These actions are expected to drive EBITDA improvement in FY2026 under a more focused, asset-light model.

Stiff Competition in the Cannabis Space

Despite operational improvements, top-line growth remains a concern. Canopy faces pressure from peers, such as Aurora Cannabis ACB, Tilray Brands TLRY and Village Farms International VFF, all of which are pursuing similar cost-cutting and international expansion strategies.

As the company gains ground in Europe and Australia, competitive responses from Aurora Cannabis, Tilray Brands and Village Farms could intensify.

CGC Stock Performance and Estimates

Shares of Canopy Growth have plunged 44% year to date compared with the industry’s 6% fall, as seen in the chart below.

Bottom-line estimates for fiscal 2026 and 2027 have seen mixed revisions over the past 60 days.

How to Play CGC Stock?

Canopy Growth’s restructuring-led turnaround — marked by margin gains, cost discipline and renewed medical focus — is beginning to reflect in its fundamentals. However, revenue headwinds and stiff competition remain near-term challenges. Investors may want to wait for clearer signs of sustained EBITDA improvement before initiating or expanding positions. Existing shareholders could consider maintaining exposure while monitoring this Zacks Rank #3 (Hold) company’s execution on its profitability roadmap.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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