Jefferies analysts cut the Smith Falls, Ontario, company to underperform from hold. Their price target: $23.03.
"Bulls will argue Canopy's multiple is deserved given possible near-term U.S. entry," said analyst Owen Bennett.
"While its U.S. optionality is the best among Canadian names, it is still too expensive for us."
The stock has risen 74% in the past 12 months.
The firm does note that Canopy has an option to acquire U.S. multistate operator Acreage Holdings. That option will be triggered in the event of a change in U.S. federal cannabis laws.
But for now Canopy is still unprofitable, and so is Acreage. Meanwhile, the fundamental outlook for other U.S. companies is "far superior," according to Bennett.
Canopy Growth shares at last check were up 1.4% to $35.79.
Earlier this month, Canopy Growth posted fiscal-third-quarter revenue that beat analysts’ forecasts amid a recovery in demand for pot and pot-infused drink and vape products. CGC also generated a wider per-share loss.
Ongoing cost savings as well as top-line growth and continued cost discipline put Canopy "firmly on a path to achieve profitability during fiscal 2022, with further improvement anticipated beyond,” Chief Financial Officer Mike Lee said in the statement.
Canopy Growth reported a third-quarter net loss of C$829 million (US$651.1 million), or C$2.43 a share, vs. a loss of C$109.6 million, or C$0.26 a share, in the year-earlier period. The adjusted loss before interest, taxes, depreciation and amortization was C$68 million vs. C$97 million a year earlier.