Share (Ticker: TLRY) rose on Monday after a bullish note from Cowen & Co. highlighted the relative stability of the cannabis company's revenue base. The question now: Can it catch up?
(ACB) and Canopy Growth (CGC).
The Background Story . Unlike some other cannabis inventories, which rose in 2019, Tilray has fallen by about 2% since the beginning of the year. Much of this decline can be attributed to the continued lack of marijuana.
While marihuana use is gaining acceptance for medical and recreational purposes in more and more US states, the pot is already legal across Canada, resulting in bottlenecks. Companies like Aurora Cannabis and Canopy Growth, which seem to have more products online, have performed better with double-digit growth this year. However, Tilray did not do well given concerns about supply, despite investors returning an unexpectedly heavy loss earlier this month.
What's new . Vivens Azer by Cowen & Co. repeated an outperforming valuation and a target price of $ 150 on Monday in Tilray. It raised its sales estimate for the current fiscal year to $ 179.4 million from $ 119.5 million and also increased its revenue guidance for the 2020 fiscal year. It wrote that the acquisition of Manitoba Harvest (which was completed at the end of February) Tilrays tip should give more stability line. Nonetheless, she lowered estimates of her adult adults in Canada, pointing to continued supply shortages and Tilray's reliance on third parties.
Forward-looking . Although Azer is still optimistic about Tilray, she warns that the company is likely to take longer to meet its profitability targets as it continues to "rely on oil volume sales, third-party sourcing, and increased production with a lower leverage effect . " Earnings before interest, taxes, depreciation and amortization are expected to be in balance by mid-2020, rather than mid-2019 as they had expected. Nevertheless, she believes that Tilray can achieve long-term margins of about 30%, similar to Canopy Growth.
Tilray shares rose 0.9% on Monday to $ 67.78.
Write to Teresa Rivas at [email protected]