Aurora Cannabis Reports Late As Analyst Notes These ‘Structural’ Hurdles

Canadian hashish producer Aurora Cannabis (ACB) reviews fiscal third-quarter earnings after the shut. ACB inventory and different marijuana stocks rose.


The firm reviews the outcomes after rivals Cronos Group (CRON) and Aphria reported outcomes that missed expectations, and as analysts develop involved about recent coronavirus-related lockdowns in Canada, the place circumstances have spiked and few are totally vaccinated.

Aurora Cannabis Earnings

Estimates: Wall Street expects Aurora Cannabis to lose 17 cents per share, or 21 cents Canadian. Revenue was seen ticking 2% decrease to $55.17 million, or 66.92 million Canadian {dollars}.

Results: Due after the shut.

Canada’s marijuana trade has grown extra aggressive. Aurora’s retail market share was 5.5% from January via March, in keeping with Stifel. Aphria, the most important, had 11.5%.

After increasing aggressively and, later, chopping workers and shutting amenities, Aurora has mentioned it needs to focus extra on premium weed merchandise. The transfer would go away others to combat it out over cheaper product to compete with the illicit market. Aurora additionally mentioned it might focus extra on working with third-party suppliers, after churning out extra weed from its cultivation amenities than prospects wished.

ACB Stock, Marijuana Stocks

ACB inventory rose 1% to 7.70 in premarket buying and selling on the stock market today. Shares have a 26 Composite Rating and a 29 EPS Rating.

Among different marijuana shares, Canopy Growth (CGC) was 1.7% early Thursday. Tilray (TLRY), which merged with Aphria this month, added 1.6%. Cronos edged up 0.6%.

Marijuana shares exploded earlier this 12 months, as buyers wagered larger legalization strikes within the U.S. Other buyers, doubtlessly egged on by the Redditors who launched GameStop (GME) greater, climbed aboard. Much of that rise has evaporated after peaking in February.

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Canadian Marijuana Stocks And Covid

Cronos and Aphria in latest weeks reported falling sales, a development they attributed to coronavirus restrictions. Retail hashish gross sales in Canada have largely elevated within the Covid-19 period. But they fell in January and February.

Stifel estimates that Canada’s leisure market will surpass four billion Canadian {dollars} in gross sales this 12 months, helped by the big province of Ontario, the place shops have been initially sluggish to open. However, Stifel analyst Andrew Carter mentioned “continued lockdowns could present a risk to our market estimates for the year.”

He mentioned tendencies recommend “relatively anemic” market development for the primary three months of this 12 months, as provinces, which purchase hashish from the producers, lower stock ranges.

He additionally pointed to broader dangers for Canada’s marijuana shares.

Carter additionally mentioned the trade suffers from broader “structural” difficulties. When provinces change their buying patterns in response to downtrends, “private market operators bear the vast majority of the downside risk.” And he mentioned that whilst some producers say profitability is on the horizon, different dangers stay.

“We believe it will be increasingly difficult to profitably capture growth in the Canadian market with ‘strengthened balance sheets’ across the sector likely facilitating continued irrational deployment of capital with limited prospects of a shakeout driving the market towards rationality,” he mentioned.

Follow Bill Peters on Twitter at @IBD_BPeters.


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