Aurora Cannabis: Analysts’ Target Price after Its Earnings

Aurora Cannabis (ACB) reported its fourth-quarter results on September 11. The results disappointed analysts and investors. The company’s revenues fell short of analysts’ guidance and estimates. Aurora Cannabis’s profitability was also lower than the expectations. What are analysts’ views after the results?

Latest price update

Overall, 15 analysts covered Aurora Cannabis before its results. The consensus target price for the stock fell to 11.96 Canadian dollars from 13.23 Canadian dollars before the earnings. The target price fell 9.5%. Aurora Cannabis closed at 7.87 Canadian dollars on September 13. Currently, the revised target price means a potential upside of 52% over the next 12 months.

What do analysts say about Aurora Cannabis?

Several analysts lowered their target prices due to Aurora Cannabis’s dismal first-quarter earnings. Eight Capital, Cowen and Company, and PI Financial cut their target prices. PI Financial cut the target price to 12 Canadian dollars from 15 Canadian dollars with a “buy” rating. Eight Capital cut the target price to 12 Canadian dollars from 15 Canadian dollars. Also, Cowen and Company cut the target price to 12 Canadian dollars from 15 Canadian dollars.

On another note, a Market Insider report stated that Amplify Seymour Cannabis ETF manager Tim Seymour said, “Aurora should be able to hit its goal by the second quarter of fiscal 2020.” He thinks that the company should focus on improving its gross margin.

Peers’ earnings

Canopy Growth (CGC) (WEED), another significant cannabis player, also reported disappointing results for the first quarter of 2020 last month. The company’s first-quarter revenues missed analysts’ estimates by a wide margin. The company reported huge losses during the quarter. To learn more, read Canopy Growth: Analysts’ Views after Its Earnings.

In contrast, Aphria (APHA) reported strong fourth-quarter results. The company reported a better-than-expected top line of 128 million Canadian dollars. Aphria also reported a better-than-expected bottom line of 15.8 million Canadian dollars. The company reported a positive adjusted EBITDA of 0.209 million Canadian dollars. To learn more, read Aphria Has Analysts Feeling Optimistic—Here’s Why.

Aurora Cannabis: Analysts’ Target Price after Its Earnings

Tracking the trend

Over the past 12 months, Aurora Cannabis stock received increased coverage from analysts due to its strong fundaments. The company also increased its guidance. Aurora Cannabis expected to report a positive EBITDA in the fourth quarter, which boosted analysts’ confidence in the stock. The number of analysts covering the stock increased from four to 15 during this period.

The target price also increased gradually during this period. Analysts’ “buy” recommendations increased on the stock.

Analysts’ ratings

While Aurora Cannabis’s consensus target price fell after its earnings, analysts are still bullish on the stock.

The overall “strong-buy” rating remained unchanged from the period before the earnings release. However, an equal number of analysts recommended the stock as a “buy” and a “hold” before the earnings. The company missed its revenue and profitability guidance, which might have caused the target price and ratings to change.

Currently, among the 15 analysts covering the stock, three recommend a “strong-buy,” while five recommend a “buy” on the stock—down by one from before the earnings release.

Seven analysts have “hold” rating on the stock—up from six before the company’s earnings release. None of the analysts rate the stock as a “sell.”

Comparing Aurora Cannabis with its peers

As of September 13, Canopy Growth has a consensus “buy” rating with a target price of 55.7 Canadian dollars. The target price represents an upside potential of 53% from the closing price on September 13. Canopy Growth closed with a gain of 4%.

Aphria has a consensus “buy” rating with a target price of 14.9 Canadian dollars. The target price represents an upside potential of 67% from the closing price on September 13. Aphria closed with a gain of 1.0%.

To learn more about cannabis legalization and the industry, read Cannabis: While the US Waits, the World Opens Up.