Shares of Canopy Growth (CGC) - Get Report turned over a new leaf Wednesday, rocketing skyward after a top industry analyst declared the worst may be over for the Canadian pot producer's battered stock after months of declines.
Canopy's stock price shot up 14.1% to $17.48 a share after Bank of America Merrill Lynch analysts raised their rating on the marijuana grower's shares to buy.
Analysts at BofA Merrill Lynch in September had previously downgraded Canopy to neutral from buy, arguing the pot grower and its peers were overvalued, according to Bloomberg.
Investors have grown increasingly disenchanted with Canopy amid big losses and disappointing sales across the cannabis sector, partly driven by a slow launch of retail outlets in Canada.
But after falling by more than a third over the fall, the cannabis stock offers a buying opportunity for investors, the analysts write.
Overall, Canopy's shares have lost nearly two-thirds of their value over the last seven months, after trading at just under $50 a share on April 22.
Retail sales of pot have begun to pick up in Canada, with encouraging signs as well that outlets are also working through a glut in inventory, the BofA Merrill Lynch analysts noted.
Canopy's gains were part of a broader rally on Wednesday by marijuana stocks, driven in part by the passage by a Congressional committee of a bill that would repeal the federal ban on cannabis.
Still, analysts at BofA Merrill Lynch kept their $19 a share price target on Canopy, saying the company remains a "show me story."
"However, the worst looks over and, if momentum returns, the market may again contemplate what Canopy could become," the analysts wrote.
Elsewhere in the Cannabis space, the Alternative Harvest ETF
rose 73.02 cents, or 4.39%, to $17.36. The AdvisorShares Pure Cannabis ETF
rose 71.4 cents, or 5.97%, to $12.66. The Horizons Marijuana Life Sciences ETF
rose 41.36 cents, or 6.2%, to $7.08.