Aurora Cannabis Inc. ACB is close to being awarded the maximum number of lots for domestic cannabis production in Germany. The deal's completion is subject to the finalization of an appeals process next week; Canaccord Genuity considers the process a moderate-to-high risk.
The Analyst
Matt Bottomley maintained a Speculative Buy rating on Aurora and raised the price target from CA$13 ($9.76) to CA$13.50 ($10.13).
The Thesis
The market potential in Germany could translate to long-term upside, according to Bottomley.
Germany's peak medical demand is double Canada's, with growing public acceptance and high reimbursement expected.
"We believe Aurora's receipt of this license adds incremental legitimacy to the overall international optionality secured by the company as of late," Bottomley wrote in a note.
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Aurora made an impressive early start in Canada's adult use market, reporting recreational weed sales of CA$21.6 million in the second quarter, or 20-percent market share, Bottomley said. The company's sales volumes imply that Aurora earned a gross price of more than CA$6 per gram of dried flower and more than CA$10 per gram of oil, he said. If accurate, both figures exceed Cannacord's expectations.
The analyst also mentioned Aurora's multiple acquisitions in recent years, advising investors to keep a close eye on the integration of these products in future sales quarters.
Price Action
Aurora's stock traded around $9.04 at time of publication, down 1.4 percent.
Related Links:
Aphria, Aurora Cannabis, Wayland Group Win Public Tender To Grow Medical Marijuana In Germany
Aurora Cannabis Files Preliminary Prospectus To Raise Up To $750M
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