Aurora Cannabis: What Makes Upside Potential For This Pot Stock? Analyst Has An Idea

Canadian cannabis giant Aurora Cannabis ACB reported its financial and operational results Thursday for the fiscal first quarter that ended September 30, 2022, with revenue of CA$49.26 million ($37.14 million), down by 18% from CA$60.11 million in the same period year ago.

Adjusted EBITDA was a loss of CA8.7 million, versus a loss of CA$11.04 million in the corresponding quarter of last year. 

The Analyst

Cantor Fitzgerald’s Pablo Zuanic kept an ‘Overweight’ on the stock and a 12-month price target of $3.00 per share. 

The Thesis 

The company slightly improved cash burn and EBITDA results in this quarter, with management being confident it will reach positive EBITDA by December, partly thanks to its $150-170 million cost savings plan, said Zuanic. 

Aurora holds 24% share in Canada’s domestic medical market, and with $70 million in exports over the last 15 months, the company claims it is the global leader in medical marijuana. 

“As more markets expand their medical programs (including Germany’s together with recreational legalization) and as a potential future licensee for domestic recreational production in Germany, we think Aurora is one of best-positioned marijuana companies in a global ex US context,” the analyst said.

Aurora is #2 in the German medical flower market while claiming to be the leader in the UK and Poland. It's also well positioned as the sole flower supplier currently in France. The company holds one of ten licenses to supply 500 coffee shops in the Netherlands.

As for Germany, “as one of the three domestic licensees, we think Aurora is well positioned to win a recreational production license.”

“We see Aurora more of a pure cannabis play” compared with Tilray TLRY and Canopy Growth CGC, “and note the company generates more than 80% of its cannabis gross profits from better quality businesses (domestic/international medical cannabis sales), in our view,” Zuanic concluded. 

The Price Action

Aurora shares were trading 12.1% higher at $1.47 per share at the time of writing late Monday morning. 

Photo: Courtesy of Daniel Norin on Unsplash


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