4 Oct

Aurora’s Growth Initiative Update Drives Its Stock

WRITTEN BY Rajiv Nanjapla

Aurora Cannabis (ACB) stock has been under pressure since it reported weaker-than-expected revenue in its fourth-quarter earnings results on September 11. Following its fourth-quarter results, many analysts lowered their price targets on its stock. On September 19, MKM Partners initiated coverage on Aurora with a “sell” rating. All these factors led the company’s stock to fall 34.7% from September 11 to October 2.

On October 3, Aurora provided an update on its current operations and the progress of its various construction facilities. The update appears to have raised investors’ confidence, leading to an increase of 8.1% in its stock price.

Let’s look at the key takeaways from yesterday’s press release.

Aurora’s current operations

Aurora announced that its production facilities Aurora Vie, Aurora Ridge, and Aurora River were operating at their licensed capacities of 4,000 kg per year, 7,000 kg per year, and 28,000 kg per year, respectively. It also announced that the EU good manufacturing practice audits for Aurora Vie and Aurora River were complete, and it was expecting to receive certification soon. The company is hoping that the certification will significantly boost its exports to European markets.

According to the press release, Aurora Sky is on track to achieve its production target of 100,000 kg of marijuana per year. The facility boasts a state-of-art automation facility, which will provide greater control over the environment, thus producing high-quality and low-cost cannabis. The company has also begun harvesting at its Aurora Valley outdoor facility, which spans 200 acres. For more info, read Why Aurora Cannabis Wants to Grow Cannabis Outdoors.

At its Aurora Eau facility in Lachute, Quebec, Aurora has begun harvesting its first crop of 6,000 outdoor-grown cannabis plants. The company expects to produce 600 kg of biomass from it. It’s invested 1.5 million Canadian dollars in Aurora Prairie to drive the research and development programs. The research work will focus on identifying high-quality breeds and optimizing plant growth.

Aurora’s update on its construction facilities

Aurora Cannabis is focusing on the expansion of its production, the development of its cannabis-derived products, and research and testing to drive growth.

Canada is expected to legalize the sale of cannabis-derived products, such as vapes, edibles, and infused beverages, later this month. The company is, therefore, constructing Aurora Polaris, which will produce edibles and vapes. Aurora has stated that the construction of the Polaris facility is almost complete, and it expects to occupy the building by the end of this month.

Aurora expects to complete the construction of Whistler’s Pemberton facility by the end of this year. Currently, the company operates four rooms in the facility, which together produce 1,200 kg of organic marijuana per year. The company plans to add 11 rooms by November. Once complete, the facility is expected to produce 4,500 kg of organic cannabis per year. The company plans to introduce cannabis-derived products under the brand name Whistler Cannabis post-legalization.

The company also added that the construction of 1.6 million square feet of its Aurora Sun facility located in Medicine Hat, Alberta, is near completion. At Aurora Nordic 2, located in Odense, Denmark, the construction of outdoor facilities is complete. The facility spans 1 million square feet.

The company said that both its Aurora Sun and Nordic facilities were constructed based on its Sky Class design. The design provides greater control over the environment, thus resulting in greater, higher-quality yields.

Progress in research and testing facilities

Aurora is also expanding its research and testing facilities through its cannabis innovation center in Comox, British Columbia, and Anandia Laboratories in Vancouver, British Columbia. The company expects to complete the construction of its innovation center at Comox by the end of this year. The innovation center will have a 22,500-square-foot greenhouse cultivation facility and 10,000 square feet of laboratory space. The company has stated that the facility will focus on the development of intellectual property, new genetics, and specialized cultivation technology to drive Aurora’s growth.

On the testing front, Aurora plans to open the new headquarters of its wholly-owned subsidiary, Anandia Laboratories, in Vancouver on October 8. The new cannabis testing facility will add 12,600 square feet of laboratory space. The company also plans to add 13,000 square feet of office space by the end of this year. The facility boasts state-of-the-art technology and automation to improve efficiency. According to the company, the facility is equipped to conduct various tests on cannabis, which includes testing for 14 different cannabinoids. It also possesses a plant tissue culture facility, through which the company hopes to raise the productivity of licensed farmers.

Apart from these updates, Aurora also provided information on the progress of its joint research program with the UFC, its global hemp operations, and the expansion of its exports to the United Kingdom, Poland, and Australia. All these factors appear to have led to a rise in the company’s stock price on October 3.

Other players

Other players, such as Canopy Growth (CGC) (WEED), Aphria (APHA), and Cronos Group (CRON), are also getting ready for the second phase of legalization.

Last month, Canopy’s CEO, Mark Zekulin, told CNBC that the company would introduce vapes in Canadian markets in December. CFO Mike Lee announced last month that the company planned to launch infused beverages in the fourth quarter. He added that the company was constructing a production facility at Smiths Falls, Ontario. Earlier this week, Canopy acquired a majority stake in BioSteel Sports Nutrition.

Aphria has partnered with PAX Labs to provide cannabis extracts for its vape products. The company plans to introduce these products for both medical and adult-use purposes. For more on Aphria’s initiatives, be sure to read Cannabis 2.0: Aphria Gets Ready for Edibles Market.

Last month, Cronos Group signed an agreement with MediPharm Labs (MEDIF) to provide filling and packaging services for its vape products. For a look at analysts’ ratings on Cronos, check out Cronos Group: Target Price and Valuation Update.

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