U.S.-listed shares of Canadian cannabis companies rallied in premarket trade Friday, after a better-than-expected earnings report from market leader Canopy Growth Corp. /zigman2/quotes/200603886/composite CGC +1.36% /zigman2/quotes/202205609/delayed CA:WEED +5.07% bolstered hopes for the beaten-down sector. Canopy reported a narrower-than-expected fiscal third-quarter loss and revenue that rose above forecasts, amid strength in business-to-consumer sales. The report comes a day after Aurora Cannabis /zigman2/quotes/210559470/composite ACB +2.98% /zigman2/quotes/203734337/delayed CA:ACB +4.25% reported a more than C$1 billion loss for its latest quarter. MKM analyst Bill Kirk said Canopy's report was a beacon of hope for the sector and should boost sentiment. "We had expected only small improvements from the prior quarter, but Canopy is showing a meaningful progression," Kirk wrote in a note to clients. Still, the path to profitability remains unclear and Kirk is waiting for the earnings call for details on Cannabis 2.0, the second phase of Canadian legalization that allows derivatives, including edibles and beverages. "We doubt early 2.0 sales will be a significant contributor given the lack of activity observed at production facilities two weeks before 2.0 legalization," he wrote. "We continue to rate WEED shares Neutral." Canopy's U.S.-listed shares rose 18% premarket. Aurora was up 7%, Cronos /zigman2/quotes/206842762/composite CRON +4.27% rose 6%, Tilray /zigman2/quotes/209129655/composite TLRY +17.09% was up 7%, Aphria /zigman2/quotes/207425803/composite APHA -0.41% /zigman2/quotes/205566616/delayed CA:APHA +1.56% was up 8% and Organigram /zigman2/quotes/209289540/composite OGI +1.56% was up 6%. The ETFMG Alternative Harvest ETF /zigman2/quotes/204332491/composite MJ +1.87% has fallen 54% in the last 12 months, while the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.36% has gained 23%.