Aurora Cannabis (NYSE:ACB) stock lost 56.4% of its stock value in 2019. Investors were skeptical due to the company’s unimpressive results. Also, Aurora Cannabis missed its own guidance, analysts downgraded the stock, and the company cut its expansion plans. While some analysts think that Aurora Cannabis could bounce back in 2020, it needs to secure funds by scaling down its expansion plans. The company ramped up its production in 2019, which increased its debt burden.
Analysts revised Aurora Cannabis’s revenue estimates
Analysts reduced the revenue estimates for fiscal 2020 after the company reported its fiscal first-quarter results in November. Let’s take a look at the month-over-month revenue estimate revisions for Aurora Cannabis. Before the company’s first-quarter earnings, analysts expected it to report revenue of 511 million Canadian dollars. In January, analysts reduced the estimate to 382 million Canadian dollars. In February, analysts lowered the revenue estimate slightly to 381 million Canadian dollars for fiscal 2020.
For fiscal 2021, analysts lowered the estimate of 683 million Canadian dollars in January to 650 million Canadian dollars in February. For fiscal 2022, analysts reduced the forecast of 1.1 billion Canadian dollars in January to 1.0 billion Canadian dollars in February.
Meanwhile, analysts also revised the estimates for Canopy Growth (NYSE:CGC)(TSE:WEED). In February, analysts lowered the company’s revenue estimate for fiscal 2020 to 408 million Canadian dollars. Analysts also expect the company to report a higher EBITDA loss in fiscal 2020. To know more, read Analysts Revise Canopy Growth’s Estimates for 2020.
Higher EBITDA loss in fiscal 2020
Before the first-quarter results, analysts expected an EBITDA loss of 36 million Canadian dollars for fiscal 2020. However, after the results, analysts expected the EBITDA loss to be higher at 104 million Canadian dollars in January. In February, analysts expect Aurora Cannabis to report an EBITDA loss at 103 million Canadian dollars.
For fiscal 2021, analysts hope Aurora Cannabis’s EBITDA loss will be less. By then, store roll-outs and the revenue might have improved in Canada. They expect the loss to be around 35 million Canadian dollars. However, for fiscal 2022, the company could report higher losses of 196 million Canadian dollars.
For fiscal 2020, analysts lowered the gross income estimate from 229 million Canadian dollars in January to 228 million Canadian dollars in February.
Reason for analysts’ revisions
Aurora Cannabis missed the revenue estimates in the last two quarters. The industry’s struggles aren’t hidden anymore. The lack of legal stores is weighing in on the company’s revenues. Although the situation is expected to get better this year, analysts still want to be practical. Also, the recent departure of Cam Battley, Aurora Cannabis’s chief commercial officer, made analysts and investors doubt the company’s leadership position.
Other companies have seen leadership changes. Many cannabis companies have seen drastic leadership level changes since 2019, which made the sector look weaker. Recently, MedMen’s CEO departed amid the cannabis industry’s cash crunch.
According to Reuters, the company could report its earnings for the second quarter of fiscal 2020 on February 10. For the upcoming second quarter of fiscal 2020, analysts expect a 49.7% YoY (year-over-year) increase in the revenue to 81.1 million Canadian dollars.
Analysts’ ratings for Aurora Cannabis
Currently, 19 analysts cover Aurora Cannabis stock. Most of the analysts are bearish on the stock, especially after the leadership change. The company’s leadership team made investors and analysts confident in its growth for the future. Among the analysts, seven recommend a “hold,” four recommend a “sell,” and one recommends a “strong sell.” However, five analysts recommend a “buy,” while two recommend a “strong-buy.” The average target price on the stock is 4.48 Canadian dollars, which is 58% higher than its last closing price. Meanwhile, Hexo has a target price of 2.41 Canadian dollars, which shows a 33% upside potential. Aphria has a target price of 11.7 Canadian dollars, which represents an 86% upside potential.
On Monday, Aurora Cannabis received EU GMP (European Union Good Manufacturing Practice) certification for its Aurora River production facility. The certification will help the company expand its market in Europe. Now, Aurora Cannabis can sell its medical cannabis products in Germany after receiving approval from regulators, which boosted Aurora Cannabis stock this week. So far, the stock has risen 13.2% this week. Meanwhile, Canopy Growth stock has fallen 0.93%, while Aphria has risen 1.9%. Hexo has risen 8.8% this week.
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