Aurora’s Q1 Results Loom: Will Analysts Stay Bullish?

Aurora Cannabis (ACB) is set to report its fiscal 2020 first-quarter results on November 14, and investors are waiting with bated breath. The turmoil in the cannabis sector has led to a negative market sentiment, and Aurora Cannabis has seen its share of suffering this year. What do analysts expect for it going forward?

Compass Point cut its target price for Aurora Cannabis

On November 6, Compass Point cut Aurora’s target price to 5 Canadian dollars from 8 Canadian dollars. The company reported disappointing fiscal 2019 fourth-quarter results on September 11, missing its revenue guidance. Peer Canopy Growth (CGC) (WEED) also reported lower-than-expected results. Multiple cannabis companies’ missing their revenue targets made analysts doubt the future of the sector. Hence, analysts cut the target prices of many cannabis stocks. Recently, PI Financial cut the target prices of a whopping 15 cannabis players.

Latest price update for Aurora

A total of 17 analysts are following Aurora ahead of its first-quarter results. Their consensus target price for its stock is down at 7.68 Canadian dollars compared to 14.09 Canadian dollars prior to its fourth-quarter earnings release—a fall of 45.4%. Aurora Cannabis closed at 5.03 Canadian dollars on November 8. Its current revised target price shows a potential upside of 53% over the next 12 months.

Aurora’s Q1 Results Loom: Will Analysts Stay Bullish?

What analysts are saying

After Aurora’s bleak fourth-quarter results, several analysts lowered their target prices. Here’s what changes analysts have made to its target price since then:

  • PI Financial cut its target price to 12 and then 7 Canadian dollars from 15 Canadian dollars with a “buy” rating.
  • Eight Capital cut its target price to 12 Canadian dollars from 15 Canadian dollars.
  • Cowen and Company cut its target price to 12 Canadian dollars from 15 Canadian dollars. Later, it reduced it to 8 Canadian dollars.
  • Stifel downgraded ACB to “sell” from “hold.” It also cut its target price to 5 Canadian dollars from 7 Canadian dollars.
  • MKM Partners gave ACB a “sell” rating with a target price of 5 Canadian dollars. Later, it reduced its target to 3.5 Canadian dollars.
  • CIBC provided a “neutral” rating with a target price of 7 Canadian dollars.
  • Jefferies cut its target price to 7 Canadian dollars from 14 Canadian dollars.

Peers’ earnings

Cannabis peer Canopy Growth (CGC) (WEED) will report its fiscal 2020 second-quarter results on November 14. Analysts expect its revenue to come in at around 108 million Canadian dollars.

Aphria (APHA) reported a strong fiscal 2020 first-quarter results. It reported a solid top line with revenue of 126.1 Canadian dollars.

Tracking the trend

Aurora Cannabis stock now has more coverage from analysts due to its strong fundamentals in the last 12 months. Despite the ups and downs in the sector, Aurora has a strong footing because of its growth and expansion strategies. Last month, it gave an update on the progress of its global operations and growth initiatives.

Furthermore, the number of analysts covering the stock increased from four to 17 over this period. Its target price also increased steadily. Analysts’ “strong buy” and “buy” recommendations also increased.

Analysts’ ratings for Aurora

Aurora Cannabis’s target price fell after its fourth-quarter earnings release. However, analysts remain bullish on the stock. The overall rating on the stock is “buy” or “strong buy.”

Currently, of the 17 analysts covering the stock, three have given it “strong buy” ratings (down from four before its earnings release). Four have given it “buy” ratings (down from six before its earnings release).

Eight analysts have “hold” ratings on the stock (up from six before its earnings release). One calls the stock a “sell,” and one calls it a “strong sell.”

Comparing Aurora Cannabis with its peers

On November 8, Canopy Growth had a consensus “hold” rating and a price target of 44.4 Canadian dollars, a potential upside of 56.8% from its closing price of 28.3 Canadian dollars on November 8. Canopy closed November 8 with a gain of 4%.

Aphria has a consensus “buy” rating and a price target of 12.7 Canadian dollars, a potential upside of 89% from its closing price of 6.7 Canadian dollars on November 8.

Recently, Aurora was in the news providing updates on its growth strategy. It announced new products with CTT Pharma. These products will be for its medical patients in Canada. It also signed a sublicensing agreement with EnWave in Australia. However, Aurora’s rising debt concerns compared to its peers’ are something to keep an eye on. To learn more, read Aurora Cannabis: Why Investors Must Watch Its Debt.

For more cannabis-related news and updates, visit 420 Investor Daily.