Shares of Village Farms International VFF have lost 27% over the past three months, despite the cannabis operator delivering first-quarter 2026 revenue growth that exceeded expectations. The company continues to benefit from robust international demand for cannabis, particularly in Europe, where record export sales and capacity expansions have strengthened its long-term growth prospects.
However, the investment case is far from straightforward. Village Farms still operates in a highly competitive cannabis industry, while regulatory uncertainty in the United States and growing competition in international markets remain key overhangs. Let's take a closer look at whether investors should view the recent pullback as a buying opportunity or a reason to stay on the sidelines.
International Expansion Fuels VFF’s Growth, but Risks Persist
Village Farms' first-quarter results highlighted the growing importance of its international cannabis business. Total cannabis sales increased 27% year over year to $49.7 million, primarily driven by a 171% jump in international export sales to a record $14.6 million. The company also reported a 448% increase in Netherlands sales, reflecting continued momentum in European markets.
Management attributed the strong performance to robust demand for its EU-GMP-certified medical cannabis, particularly in Germany, where it continues to gain market share. It believes recent facility upgrades have expanded Village Farms' production campus into the world's largest EU-GMP-certified cannabis facility, strengthening its ability to capitalize on growing export opportunities.
Village Farms has also continued to execute on its expansion strategy. Since reporting first-quarter results, the company has begun cultivation at its Phase II facility in the Netherlands while advancing the Delta 2 greenhouse expansion in Canada, which is expected to support higher production volumes in the coming quarters.
Nevertheless, the international opportunity is not without risks. While management maintained that its EU-GMP-certified products remain relatively insulated from the price compression affecting other parts of the cannabis supply chain, it also acknowledged that pricing softness has begun to emerge in the Netherlands as industry supply increases. If pricing pressure broadens or competition intensifies in key European markets, Village Farms could find it more difficult to generate the returns needed to justify its ongoing capacity expansion.
Growing Competition Could Limit VFF's Upside
Village Farms' international expansion strategy is unlikely to go unchallenged. Several cannabis producers are also accelerating their presence in global medical cannabis markets, particularly in Europe, where demand has grown rapidly following regulatory reforms. As more companies target these markets, sustaining market share and pricing power could become increasingly difficult.
Among its key competitors, Aurora Cannabis ACB has made international medical cannabis the centerpiece of its growth strategy. The company continues to expand across key markets, including Germany, Australia and Poland, while prioritizing higher-margin medical cannabis over its consumer business. Aurora expects international medical cannabis to remain its primary growth engine, supported by continued expansion and new product launches.
Tilray Brands TLRY is also strengthening its international medical cannabis platform. The company recently acquired HelloMD to expand patient access in Canada while continuing to grow its medical cannabis operations across Europe through Tilray Medical and CC Pharma. Management believes these initiatives will further strengthen Tilray's vertically integrated medical cannabis business and support long-term international growth.
VFF Stock Performance & Valuation
Shares of Village Farms have lost 45% year to date, underperforming the industry’s 21% decline.
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EPS estimates for 2026 and 2027 have slightly declined over the past 60 days.
Image Source: Zacks Investment Research
How to Play VFF Stock?
Village Farms continues to execute well operationally, with international cannabis emerging as its primary growth driver. Strong export demand, expanding production capacity and increasing exposure to regulated European markets position the company to benefit from the long-term growth of the global medical cannabis industry.
However, investors should remain cautious. The company's growth is becoming increasingly dependent on international markets, where competition is intensifying as peers pursue similar expansion strategies. Although management believes its EU-GMP-certified production provides a competitive advantage, broader price compression across the cannabis industry and early signs of pricing softness in the Netherlands suggest that maintaining margins could become more challenging over time. Meanwhile, despite viewing the United States as a significant long-term opportunity, management plans to remain patient until greater regulatory clarity emerges, delaying another potential avenue for growth.
Village Farms currently carries a Zacks Rank #4 (Sell), suggesting that investors may be better off waiting for a more favorable risk-reward profile before initiating or adding to positions. Although the stock's sharp correction may appear attractive at first glance, downward revisions to earnings estimates suggest that analysts remain cautious.
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).