Are You Ready for ACB’s Earnings Today?



Aurora Cannabis (NYSE:ACB) will report its results for the second quarter of fiscal 2020 today before the market opens. Usually, investors keep a close eye on big cannabis players’ earnings results including Aurora Cannabis and Canopy Growth (NYSE:CGC)(TSE:WEED). These big players are the foundation of the cannabis industry. Notably, headwinds that impact these companies affect the entire sector. After a string of bad news from ACB, let’s see how analysts view the stock.

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ACB’s second-quarter results today

Last week, PI Financial and many other analysts had a bearish view on ACB stock. We don’t really expect a surprise from the company’s second-quarter results. ACB stated in its preliminary results that the revenue would be lower than expected in the second quarter. The company expects its net revenue to be around 50 million–54 million Canadian dollars. Supply disruptions could also impact the company’s international revenue.

Analysts hope to see 20.7% YoY (year-over-year) growth in the net revenue to 65.4 million Canadian dollars. Sequentially, ACB’s revenue could fall by 13.0%. We could see another quarter of negative profitability. Also, the EBITDA loss could be around 56.5 million Canadian dollars in the second quarter. ACB stated that it’s working on scaling down expansions and reducing SG&A expenses to hit profitability by the first quarter of fiscal 2021. However, analysts don’t expect the company to see positive EBITDA before the second quarter of fiscal 2021.

Among the cannabis players, only Aphria (NYSE:APHA) reported consecutive quarters with positive EBITDA. OrganiGram also reported strong results in its recent first quarter.

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Analysts’ bearish view

Overall, analysts have a bearish view of ACB stock. The company’s CEO stepped down and it announced 25% job cuts. Also, the company announced a subdued outlook for the second quarter. Many analysts reduced ACB’s target price, which I discussed in ACB Made Analysts Skeptical, Stock Took a Massive Hit.

Currently, 19 analysts cover Aurora Cannabis stock. Among the analysts, 12 recommend a “hold,” two recommend a “buy,” four recommend a “sell,” and one recommends a “strong sell.” The average target price on the stock is 3.15 Canadian dollars. The target price represents a 64% upside potential from yesterday’s closing price. The stock closed with a loss of 5.1% yesterday.

ACB stock has fallen 22.7% in February. Canopy Growth and Cronos Group (NASDAQ:CRON) stock have fallen 12.8% and 6.2% in February. Cresco Labs has fallen 24.6% this year and seems to have bottomed out. Canopy Growth will report its third-quarter results tomorrow before the market opens. Analysts expect the company to report revenue of 108.6 million Canadian dollars and an EBITDA loss of 108 million Canadian dollars in the third quarter.

We’ll know more about ACB’s future and the situation in the cannabis industry after its earnings call. Stay with us for the latest updates.


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