MKM Lowers Aurora Price Target On Softening Cannabis Industry Forecast

Aurora Cannabis Inc ACB stock is down 30.03% on a year-to-date basis, and 35.1% over the last 30 days.

The Analyst

MKM Partners analyst Bill Kirk maintained a Sell on Aurora and lowered the price target from CA$5 ($3.78) to CA$3.50 ($2.65). 

The Thesis

MKM has three reasons for cutting the price target, Kirk said in a Monday note: 

  • Industry pricing has fallen. 
  • The illicit cannabis price gap has widened. 
  • Aurora’s new store openings in Quebec and Ontario are not meeting expectations.

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The cannabis company warned during its Sept. 12 earnings call that July and August were slower, and given HEXO Corp HEXO's commentary and pace of new stores, MKM has concluded it's unlikely September and early October were any better, the analyst said. 

MKM lowered its first-quarter 2020 net sales estimate from CA$117 million to CA$98 million and cut the adjusted EBITDA estimate from CA$14 million to CA$21 million.

"We believe there is still some estimate optimism to shake and trim from the industry," Kirk said. 

Price Action

Aurora shares were down 6.52% at $3.44 at the time of publication Monday. 

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Photo courtesy of Aurora. 

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Posted In: Analyst ColorCannabisPrice TargetReiterationMarketsAnalyst RatingsBill KirkMKM Partners
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