Analyst Likes Tilray In The Long Run, But Says Stock Is Overvalued Right Now

Cronos Group Inc CRON and several other cannabis stocks have received some love from Wall Street analysts in the past week, but one analyst said Wednesday the 2019 struggles for Tilray Inc TLRY will continue in the near term.

The Analyst

Oppenheimer analyst Rupesh Parikh initiated coverage of Tilray on Wednesday with a Perform rating and no price target.

The Thesis

Even with Tilray shares down nearly 50 percent year to date, Parikh said it's still hard to justify much upside for the long-term growth stock given its current valuation.

“We look favorably on Tilray’s ability to capitalize on the longer term growth opportunities globally, but we believe the combination of a full valuation and the potential for a slower ramp in Canada given supply shortages in an ‘asset-light model’ limit the potential for outperformance near term,” Parikh wrote in a note.

Need more cannabis news? Check out all of our coverage here.

Parikh said Tilray is bulking up its Canadian business by improving its infrastructure and is adding to its CBD business via acquisitions. In the medical business, Tilray has opportunity to expand into new geographical markets, as well as add new partners.

Another long-term differentiator for Tilray is the company’s top-tier management teams, which Parikh said is one of the best among top cannabis companies. In addition, partnerships with companies like Sandoz, Shoppers Drug Mart, Pharmasave Drugs and Anheuser Busch Inbev NV BUD bode well for the company’s long-term positioning in key markets.

Unfortunately, Tilray shares trade at about 6.5 times Oppenheimer’s fiscal 2021 sales forecast and about 45 times the firm’s 2021 EBITDA estimate, a valuation that suggests little near-term upside.

Price Action

Tilray shares traded lower by 2.5 percent to $35.63 on Wednesday.

Related Links:

Analyst: Cronos And Altria Make A Powerful Team

Bank Of America Double Upgrades Cronos, Says Bear Thesis 'Increasingly Untenable'

date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm
Posted In: Analyst ColorCannabisInitiationTop StoriesMarketsAnalyst RatingsOppenheimerRupesh Parikh
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

The Benzinga Cannabis Capital Conference is coming to Florida

The Benzinga Cannabis Capital Conference is returning to Florida, in a new venue in Hollywood, on April 16 and 17, 2024. The two-day event at The Diplomat Beach Resort will be a chance for entrepreneurs, both large and small, to network, learn and grow. Renowned for its trendsetting abilities and influence on the future of cannabis, mark your calendars – this conference is the go-to event of the year for the cannabis world.

Get your tickets now on bzcannabis.com – Prices will increase very soon!


Loading...