Cantor Cuts Aurora Price Target On Cannabis Sales Decline, Market Share Loss

The implied sequential decline in Aurora Cannabis Inc’s ACB June quarter sales and loss of market share are concerning, according to Cantor Fitzgerald.

The Aurora Cannabis Analyst: Pablo Zuanic maintained an Overweight rating on Aurora Cannabis and reduced the price target from CA$29 ($22.02) to CA$17.50 ($13.29). 

The Aurora Cannabis Takeaways: Shares of Aurora Cannabis fell 11% after the company issued a business update, with its June quarter sales and gross margin guidance below consensus estimates; reduced fiscal 2021 EBITDA targets; and the announcement of further write-downs, Zuanic said in a note.

“However, we remain OW and think the valuation is attractive even on the revised outlook,” the analyst said. 

Given the company’s domestic scale in both recreational and medical cannabis and growing overseas presence, shareholders could benefit from “a future cycle of mergers among Canadian LPs,” he said.

Yet Aurora Cannabis has “some catching up to do” in its product portfolio and to reverse the recent loss of market share, Zuanic said. 

“A strengthened line of vapes and pre-rolls, and increased focus on premium/better flower should address these issues, according to newly appointed CEO Miguel Martin, and should also contain gross margin pressures.”  

ACB Price Action: Shares of Aurora Cannabis were trading 4.13% higher at $7.82 at the time of publication Wednesday.

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Photo courtesy of Aurora Cannabis.