13 Aug

Tilray’s Q2 Earnings Are Out: Did It Impress?

WRITTEN BY Sushree Mohanty

Tilray (TLRY) just reported its second-quarter 2019 results. The stock closed with a gain of 8.3% today prior to its earnings. Let’s take a closer look.

Tilray’s Q2 Earnings Are Out: Did It Impress?

Tilray’s Q2 earnings

In the second quarter, Tilray reported a 371% year-over-year increase in revenue to $45.9 million. Tilray beat analysts’ estimate of $41.1 million in revenue.

The company’s management noted in its press release that many factors drove the revenue increase. These factors included the legalization of the Canadian adult-use market, the Manitoba Harvest acquisition, and growth in international medical markets, mainly in Europe. Its gross margin increased to 27%, slightly below analysts’ estimate.

Rising costs that Tilray incurred due to the ramping up of cultivation facilities in Canada and Portugal affected its gross margin. However, the company reported a higher loss than expected, reporting EPS of -$0.32. Analysts estimated EPS of -$0.25.

An August 13 Yahoo Finance article noted that the Tilray attributed its losses to higher operating expenses relating to growth initiatives, its additions of Manitoba Harvest and Natura, the expansion of its international operations, as well as other factors.

Tilray management’s view of the results

During the earnings results, Brendan Kennedy, Tilray’s president and CEO, noted, “We are pleased with our second quarter results and strong business momentum.”

Kennedy added, “Our team has executed against our plan, with adult-use revenue nearly doubling in the second quarter compared to the first quarter and gross margin increasing sequentially for the second quarter in a row. As we continue to grow, we remain focused on our long-term strategic objectives and deploying capital to maximize stockholder value.”

Tilray’s stock performance

Tilray stock has suffered this year, declining 34.7% year-to-date. However, the stock surged today prior to its earnings release. After market hours, its stock was down 5.9% at 5:01 PM EDT. Read Here’s Why Tilray Is Up ahead of Its Earnings Results for more insight into why the stock was up prior to earnings.

Price coverage for Tilray

Currently, 16 analysts cover Tilray stock, and there hasn’t been much change in target price and analysts’ ratings. Four analysts recommended a “buy” for the stock, and 11 rated the stock as a “hold.” One analyst rates the stock as a “sell.”

Tilray’s stock forecast shows the target price set at $79.30, which represents a 72% upside potential for the stock.  Tilray’s stock price as of today’s close was $46.02.

Tilray’s peers’ performance

Almost all the cannabis stocks surged today. Innovative Industrial Properties (IIPR), Cronos Group (CRON), and Tilray (TLRY) drove the movement in the sector today. IIPR and Cronos closed with gains of 7.8% and 5.06%, respectively. For a wide-ranging look at today’s activity in the industry, check out IIPR, CRON, TLRY Surging: A Good Day for Cannabis Stocks.

Canopy Growth (CGC) (WEED) plans to report its Q1 of fiscal 2020 results tomorrow after market closes. The stock closed with a gain of 4.05% today. Aurora Cannabis’s (ACB) plans to report its Q4 results next month, and its stock closed with a gain of 1.06% today.

Cresco Labs plans to report its Q2 earnings results on August 21. The stock trades on the Canadian Stock Exchange under the ticker CL, and it closed with a gain of 17.0% today. Cresco Labs recently garnered its NewYork marijuana license deal before its earnings.

To learn more about the cannabis sector, read Cannabis Industry: What’s the Next Phase? Tilray’s management plans to conduct a conference call to discuss results. Stay tuned to get more insights into Tilray’s performance and key takeaways from its earnings call.

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