Tilray: What to Expect from Its Q3 Earnings

Global cannabis producer Tilray (TLRY) plans to announce its third-quarter results on November 12. The company scheduled a conference call at 5:00 PM ET on the same day. So far in November, Tilray’s stock price has risen by 2.6%. Let’s see what we can expect from the company’s third-quarter results.

Analysts’ estimates

Analysts expect Tilray to report revenue of $49.89 million in the third quarter. This implies a YoY (year-over-year) increase of 393.4%. Analysts also expect the company to report EBITDA of -$19.46 million for a YoY increase of a mere 4.56%. The vast difference between the percentage rise in revenue and EBITDA is due to a YoY increase of 284% in its SG&A (selling, general, and administrative) expenses.

Further, analysts expect the company to report a net profit of -$28.6 million. This implies a YoY increase of just 2%. The company’s revenue is expected to grow at a CAGR of 131% until 2021. According to analysts’ estimates, the company might not be profitable for at least the next three years. Analysts forecast the company’s earnings per share to be -$0.30 for the fourth quarter for a YoY increase of 61.5%.

Analysts’ ratings and recommendations

Currently, 18 analysts cover Tilray stock. The number of analysts covering the stock increased from 10 to 18 in the last six months. Out of 18 analysts, one analyst recommends a “strong buy,” four analysts recommend a “buy,” 11 analysts recommend a “hold,” and two analysts recommend a “sell.” The consensus target price of the stock is $38.42. This implies a potential upside of 73.76% based on its current trading price of $22.11.

The consensus target price of TLRY fell from $46.67 to $38.42 in just one month. This implies a decline of 17.67%. The consensus target price was $79.30 three months ago. It has fallen by more than 100% in this period. Recently, Cowen and Company reduced TLRY’s target price from $60 to $50.

Analysis of Tilray’s third quarter

Tilray started the third quarter with five senior appointments to expand its European leadership. The company increased its production capacity by 20 hectares of outdoor cultivation space in Portugal. Further, it signed a supply agreement to export $3.3 million in medical cannabis to Germany.

As part of its expansion plans, Tilray acquired adult-use cannabis retailer FOUR20 for $110 million. Further, Tilray acquired Privateer Holdings in a downward merger agreement for 75 million Tilray shares.

Trend analysis of TLRY stock

Tilray is currently trading at $22.11. Along with many of its competitors, its stock is showing a downward trend. TLRY has fallen 4.86% in the last month.

Over the last year, Tilray’s stock price has fallen 78.58%. The year-to-date decline in its value is 67.55%, and its stock price dropped by 54.03% in the last six months. After releasing its second-quarter results on August 13, 2019, Tilray’s stock fell by 23% in just three days.

Tilray versus its peers

Tilray has lost 46% of its value in the last three months. Aurora Cannabis’ (ACB) stock value fell by 45.6%, and Canopy Growth’s (CGC) stock value fell by 40.5%.

With 18 analysts covering the stock, the consensus rating for Tilray is 2.8. Aurora Cannabis’ stock is covered by 16 analysts with a consensus rating of 2.6. Canopy Growth is currently covered by 20 analysts with a consensus rating of 2.5.