Tilray: Are Analysts Optimistic about Its Stock?


Nov. 20 2020, Updated 3:24 p.m. ET

Tilray (TLRY) took a hit after its second-quarter earnings. Turmoil in the cannabis industry also impacted the stock. Let’s discuss what analysts think about Tilray stock.

Article continues below advertisement

Analysts’ take on Tilray

An article by Cantech Letter said that analyst Vivien Azer reduced Tilray’s target price from $150 to $60 due to underdevelopment in the Canadian market. Azer said, “We would argue that TLRY has been the most impacted by weak industry supply as its asset-light model was initially overly reliant on third-party supply.”

Meanwhile, analysts at Stifel think that the company took an “asset-light” approach and depended more on partnerships compared to its peers. In contrast, Mike Philbrick, president at ReSolve Asset Management, said that an industry with massive growth opportunities comes with challenges and volatility. In order to cash in on the growth opportunities in the cannabis industry, investors should be willing to take the additional risk. Philbrick suggested buying cannabis stocks in small doses. Analysts think that Tilray focuses on investments to drive growth. As a result, profitability is still in question right now.

At 11:57 AM ET, the stock has fallen 1.8% today.

Analysts’ recommendations  

After Tilray’s second-quarter earnings, Benchmark reduced its target price to $80 from $120. Cowen and Company reduced the target price to $60 from $150. To learn more about the company’s valuation, read Tilray: Target Price and Valuation Multiple.

Article continues below advertisement

Price coverage 

Currently, 16 analysts cover Tilray stock. One analyst recommended a “strong-buy” for the stock for the next 12 months. Four analysts recommended a “buy,” ten recommended a “hold,” and one recommended a “sell.” The target price is set at 54.2 Canadian dollars, which represents a 74% upside potential for the stock.

Analysts’ estimate

Analysts expect Tilray’s revenues to be around $50.5 million for the third quarter. The expectation is higher than $10.0 million in the third quarter of 2018. Analysts also expect the company to report a loss of $0.31 per share in the third quarter—compared to a loss of $0.20 per share in the third quarter of 2018. The company might report a negative EBITDA of $17.5 million, which is lower than its EBITDA in the third quarter of 2018. The gross margin might be slightly lower at 30.1% compared to 30.5% in the third quarter of 2018.

Aurora Cannabis (ACB) is scheduled to report will fourth-quarter results on Thursday. While the company expects to report a positive EBITDA, analysts expect it to report a negative EBITDA of 19.5 million Canadian dollars. To learn more, read Aurora Cannabis: What to Expect from Its Q4 Results.

Meanwhile, Canopy Growth (CGC) (WEED) reported a negative EBITDA of 92.06 million Canadian dollars for the first quarter of 2020. The company also reported wide losses of 0.30 Canadian dollars per share in the first quarter.

Article continues below advertisement

Tilray’s stock performance

Tilray fell in August after its results. Canopy Growth’s disappointing results also impacted cannabis stocks. However, Tilray has gained 21% in September, while it has lost 56% year-to-date.

Recently, Tilray and Privateer Holdings signed an agreement to extend the lock-up period by two years to unload shares gradually. Privateer, backed by Peter Thiel, is Tilray’s largest shareholder with a 76% stake. Extending the lock-up period will avoid Privateer unloading the shares in the market. Tilray can avoid a significant stock price reduction from stock dumping.

Aurora Cannabis has gained 8.7% in September. Meanwhile, Canopy Group has gained 16.3% in September.

What’s happening with cannabis regulations?

Cannabis is a highly regulated industry. As a result, a minor misstep could hurt cannabis players. The company’s reputation is also at stake. For example, CannTrust (CTST) and Curaleaf (CURLF) violated regulations in July.

Notably, CannTrust and Curaleaf fell in August. CannTrust has fallen 3.4% in September, while Curaleaf has risen 9.6%. The Horizons Marijuana Life Sciences ETF (HMMJ) has gained 4.4% in September. HMMJ tracks the North American cannabis industry. To learn more, read Cannabis: While the US Waits, the World Opens Up.

Stay with us for more insight into the cannabis industry.


More From Market Realist

    • CONNECT with Market Realist
    • Link to Facebook
    • Link to Twitter
    • Link to Instagram
    • Link to Email Subscribe
    Market Realist Logo
    Do Not Sell My Personal Information

    © Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.