13 Aug

Tilray: What to Expect from Its Q2 Earnings Today

WRITTEN BY Sushree Mohanty

Tilray (TLRY) is scheduled to release its second-quarter results today after the market closes. The company’s management will conduct a conference call to discuss results at 5:00 PM ET.

Tilray: What to Expect from Its Q2 Earnings Today

Lately, Tilray stock has been off the radar. The stock hasn’t been performing well compared to its peers in the cannabis sector. Tilray stock has fallen 41.5% year-to-date. Meanwhile, Cronos Group (CRON) has gained 21.5%. Canopy Growth (CGC) has gained 22.3% YTD.

Tilray’s earnings

In the second quarter, analysts expect Tilray’s revenues to increase drastically. Analysts expect the company’s top line to be around $41.1 million—an increase of 323% year-over-year. Meanwhile, analysts expect the bottom line to show a net loss of 25 cents per share. The estimates also show Tilray’s gross margin around 27.8% from 42.9% in the second quarter of 2018.

In the first quarter, the company reported a wide loss due to higher operating costs and expenses. Tilray has been making acquisitions to drive its production and sales. Recently, the company acquired Manitoba Harvest—a hemp-based natural food producer. Tilray expects the acquisition to contribute $20 million to its total revenues every quarter. The company made some other acquisitions as well in the first quarter. Notably, Tilray needs to focus more on its production capacity to be sustainable compared to its peers.

Today, we’ll have to see if strong earnings results revive the company’s stock.

Stock price performance

Overall, July wasn’t a good month for the cannabis sector. The sector had regulation-related scandals. CannTrust had issues with Health Canada violations, Curaleaf had issues with FDA violations, and HEXO (HEXO) had scandal news.

The scandals took a toll on most of the cannabis players. Tilray fell 11.6% in July. Meanwhile, CannTrust (CTST), Aurora Cannabis (ACB), Canopy Growth (CGC) (WEED), Aphria (APHA), and HEXO (HEXO) fell 19.6%, 19.0%, 22.2%, and 20.1% in July.

Amid the scandals, Jim Cramer, the host of CNBC’s Mad Money, favors Cronos Group and Canopy Growth stock. Read Why Jim Cramer Favors CRON and CGC to learn more.

Since the IPO, Tilray stock has gained 89.2%. Lately, various factors impacted the stock price. As of Monday, the stock has gained 4.4% in August. Before the earnings, Tilray stock closed with a loss of 0.17% on Monday.

Will these strategies help revive Tilray stock?

A recent Nasdaq article discussed Tilray’s activities in the second quarter. The company signed an agreement with Esporão to expand its opportunities in Europe. According to the agreement, Tilray will get 20 hectares of outdoor cultivation space in Alentejo, Portugal. The company expects to export a large amount of medical cannabis oral solutions from its Canadian factory to the UK.

According to Nasdaq, gauging Tilray’s performance is difficult. The cannabis industry is in its early phases. However, the company’s growth potential and the marijuana industry look strong.

According to Yahoo Finance, Aurora Cannabis reduced its fourth-quarter sales forecast due to weaker-than-expected marijuana sales. Investors will watch Tilray’s earnings closely to determine whether retail cannabis sales are healthy in Canada and the US.

Price coverage

Currently, 16 analysts cover Tilray. According to data from Reuters, four analysts recommended a “buy” on the stock for the next 12 months, 11 recommended a “hold,” and one recommended a “sell.”

Tilray’s stock forecast shows the target price at $79.3, which represents an 87% upside potential for the stock. As of the close on Monday, Tilray’s stock price is $56.2.

Peers’ performance

Canopy Growth will report its fiscal 2020 first-quarter results on August 14. As of Monday, Canopy Growth stock has returned 22.3% YTD. Aurora Cannabis (ACB) will report its fourth-quarter results next month. The stock has gained 28.3% YTD. Cresco Labs has risen 22.2% YTD. The company will report its second-quarter earnings results on August 21. The stock trades on the Canadian Stock Exchange under the ticker “CL.” To know more, read Cresco Labs Lands New York Deal before Earnings.

Innovative Industrial Properties (IIPR) reported strong second-quarter results on August 8. To learn more, read IIPR’s Q2 Earnings Call: Key Takeaways for Investors and Why IIPR’s Q2 Earnings Came in Strong.

Read Cannabis Industry: What’s the Next Phase? to learn more about the cannabis sector.

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