Jefferies initiates coverage on Tilray
On March 8, investment firm Jefferies initiated coverage on yet another Canadian cannabis company, Tilray (TLRY). The firm gave Tilray an “underperform” rating and said that its valuations when compared with peers were a concern. The firm’s ranking comes from uncertainty about the outlook on medical marijuana and its positioning compared to its peers (HMMJ). Read Analysts’ Ratings Change for APHA, ACB, and CRON in March for more information.
Jefferies further added that the company’s share in the Canadian medical market was not in the top four, and its consumer segment was also not encouraging. The overall recommendation on Tilray was a “hold” as of March 8. In comparison, Aurora Cannabis (ACB), Aphria (APHA), and Canopy Growth (WEED) all have a “buy” recommendation.
Tilray was trading sharply lower in the pre-market session at $64.6 on March 8 from its previous closing of $69.7 on March 7. The stock shed almost 8.1%.
In our recent valuation update series, Key for Investors: Watching Cannabis Sector Valuations, we discussed how Tilray has been trading at much higher multiples than peers. Tilray was trading at a forward EV-to-sales multiple of 46x compared to Aphria’s 4.2x. Canopy Growth was trading at 19x, and Aurora Cannabis was trading at 10.3x.