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Aurora Cannabis: Target Price and Valuation Update


Nov. 20 2020, Updated 1:05 p.m. ET

So far, July has been rough for Aurora Cannabis (ACB). The stock has been trending lower ever since the beginning of the month. As of Thursday, the stock has fallen about 17%. However, the stock has delivered a positive return this year. Aurora Cannabis has delivered a positive return of 30% YTD (year-to-date). When we looked at Aurora stock price target, there was some pessimism about the changes in the stock’s consensus target price.

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Aurora Cannabis in July

Last week, Bank of America lowered its target price on Aurora Cannabis to 11 Canadian dollars from 13 Canadian dollars. To learn more, read Aurora Cannabis Stock Falls on Bank of America Downgrade. The consensus target price on Aurora Cannabis is lower in July. Among 15 analysts, the average target price was lower in July at 13.6 Canadian dollars. The target price was 14.1 Canadian dollars in June. With Aurora Cannabis stock closing at 8.5 Canadian dollars on Thursday, there’s still a potential upside of about 60% to the target price.

In July, the company’s consensus target price trended lower. The lower target price indicates a downward revision across the board. Compared to last month, analysts were relatively bearish on Aurora Cannabis in July. Among the 15 analysts covering the stock, five recommended a “hold” compared to three analysts in June. One analyst maintained a “sell” on the stock in July. Nine analysts either had a “strong-buy” or “buy” rating on the stock in July compared eight to the previous month.

While analysts’ outlook on the company has weakened, it continues to announce initiatives for future growth. Earlier this week, the company announced that it’s conducting clinical trials in partnership with UFC. To learn more, read Aurora Cannabis: New Clinical Trials on Hemp-CBD.

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While Aurora Cannabis’s target price was revised lower, its valuations have remained pretty stable in July. The company was trading at a forward EV-to-sales multiple of 14.2x, which was close to the average of 14.7x over the past three months. However, Aurora Cannabis continued to trade at a premium to the peer median, which was at 5.4x as of Thursday. The peer median includes 12 cannabis stocks listed in the footnote of the above chart. To compare the stocks’ recent valuations, read Finding an Attractive Pick Among 12 Cannabis Stocks.

Cannabis peers

July was fairly subdued for the cannabis industry as a whole. Most of the major cannabis stocks have fallen in July. CannTrust (CTST) has lost the most in July. The stock lost nearly 60% after the announcement that it didn’t comply with Health Canada’s regulations. HEXO lost almost 23.2%, while Aphria (APHA) and Canopy Growth (CGC) (WEED) fell nearly 13% in July.
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