+ 1.74
+ 0.48%
+ 0.32
+ 0.07%
+ 0.76
+ 0.45%

Why Jefferies Is Losing Its Tilray Buzz

November 16, 2020 3:27 pm
Share to Linkedin Share to Twitter Share to Facebook Share to Print License More
Why Jefferies Is Losing Its Tilray Buzz

The bullish case for cannabis company Tilray Inc (NASDAQ:TLRY) can no longer be justified after the company's third-quarter earnings report showed stalling momentum in international markets, according to Jefferies.

The Tilray Analyst: Owen Bennett downgraded Tilray from Hold to Underperform and lowered the price target from $5.60 to $4.77. 

The Tilray Thesis: A bullish stance on Tilray requires the company to "do very well" when legal cannabis accelerates internationally, Bennett said in a Monday downgrade note.

After Tilray's third-quarter report, there is "cause for concern" after international sales declined sequentially, the analyst said.

Tilray's "overly bullish" projections aren't helping the company's cause, he said.

For example, Tilray said during its third-quarter conference call that it expects the entire European Union to legalize medical cannabis within 18 months, and a number of European markets to legalize adult use in 2021 and 2022, Bennett said. 

Related Link: The MORE Act Gets A December Vote, But Don't Expect Much Else For Now

Tilray has a history of getting its outlook wrong, the analyst said.

Most notably, Tilray said in late 2018 that it expects to see another 10 to 20 markets legalizing medical cannabis in 2019, but to date only five countries have done so, he said. 

Tilray's more than 60% stock gain heading into the U.S. presidential election is "unjustified," as there is "no reason" to believe the company will be successful in the U.S., according to Jefferies.

Tilray's presence in the U.S. through Manitoba Harvest is "hardly inspiring," and its CBD ambitions are disappointing, Bennett said. 

Tilray CEO Brendan Kennedy has been a "heavy seller" of the stock, with the frequency and size picking up in September, the analyst said.

Granted, the insider sales are pre-scheduled, he said; total selling activity totaled more than $20 million, including CA$3 million in $7.76 options that don't expire until 2028.

TLRY Price Action: Shares of Tilray were trading lower by 4.84% at $7.28 at last check Monday. 

For the latest in financial news, exclusive stories, memes follow Benzinga on Twitter, Facebook & Instagram. For the best interviews, stock market talk & videos, subscribe to Benzinga Podcasts and our YouTube channel.

Related Articles

Jefferies Upgrades Tilray On EU, US Prospects

The merger between Tilray Inc (NASDAQ: TLRY) and Aphria was a “perfect match” and the entity could generate pro-forma sales growth of 33% between fiscal 2021 and 2024, according to Jefferies. read more

Tilray Debuts In Portugal Ahead Of Merger With Aphria

Cannabis company Tilray Inc. (NASDAQ: TLRY) is poised to enter the Portugal market. read more

Jefferies Upgrades Aurora And Tilray, Says Valuations, Estimates 'Now More Realistic'

Cannabis stocks Tilray Inc. (NASDAQ: TLRY) and Aurora Cannabis Inc. (NYSE: ACB) traded lower on Monday amid a broad market sell-off. read more

Jefferies Bearish On Tilray: 'The Stock Is Too Expensive For Its Outlook'