Shares of the Ontario company traded on Nasdaq at last check were climbing 5.8% to US$24.
Analyst Bill Kirk, who has a price target of C$55, or about US$46 a share on Canopy Growth, said in a research note that he doesn't expect a significant operational beat in the company's June 1 report.
But he said "sentiment is so low as to render [the risk/reward balance] very favorable."
The analyst said that the difficult environment that he expects in Canopy's fourth quarter should not come as a surprise, particularly after Aurora Cannabis (ACB) - Get Report showed a 37% sequential decline in recreational revenue.
Earlier this month, Aurora Cannabis came up short of Wall Street's third-quarter expectations, prompting a number of analysts to cut their ratings and price targets.
"After Canopy's fourth-quarter 2021 and through the reopening of the Canadian economy, we expect the company to return to sequential growth and have better aligned its supply chain/logistics to capture domestic and international demand opportunities," he said.
The analyst said that the fight over Canadian market share is likely to remain elevated and pressure pricing, "but economic reopening, and the accompanying increased store count, should help sector-wide performance."
"We believe Canopy has rationalized its organization (supply chain, logistics, infrastructure) to better capture formerly missed opportunities," Kirk said. "Canopy is better suited to build brands via greater R&D focus than peers."
While Kirk said he continues to believe that the U.S. is ultimately the best opportunity, Canopy's position in Canada is improving.
In February, Canopy Growth posted fiscal third-quarter revenue that beat analysts’ forecasts.
Last month, the company unveiled a deal under which Southern Glazer's Wine & Spirits will distribute its cannabidiol-infused beverages in the U.S.