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Aurora Cannabis to Report Q3 Earnings, Stock Falls after Split


May. 13 2020, Updated 8:40 a.m. ET

Aurora Cannabis (NYSE:ACB) announced a reverse stock split in April. The stock split happened on Monday and the stock took a hit. On Monday, the share price dropped 8.0% and closed at $7.41 on the NYSE. Aurora Cannabis closed 4.3% lower on the Toronto Stock Exchange at 10.45 Canadian dollars. The company will likely report its results for the third quarter of fiscal 2020 on May 14 after the market closes. Overall, the revenue expectations look better for the third quarter. Let’s take a look at what analysts expect for the third quarter.

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Aurora Cannabis to report higher revenues

The cannabis sector has seen a surge in sales since the COVID-19 pandemic hit and marijuana became an essential item. People started stocking up on supplies. Analysts expect higher YoY (year-over-year) growth in the third quarter of fiscal 2020 for Aurora Cannabis. The revenues could be around 66.5 billion Canadian dollars compared to 65.1 billion Canadian dollars in the third quarter of 2019. Sequentially, the revenue could also increase from 56.0 billion Canadian dollars in the second quarter of fiscal 2020.

Many of the cannabis companies couldn’t launch all of their Cannabis 2.0 products amid COVID-19. However, many of the companies launched quite a few varieties. After the pandemic ends, the companies will launch the remaining Cannabis 2.0 products, which could drive their sales. I think that analysts expect Aurora Cannabis’s revenue to rise more in the coming quarters. Analysts expect the revenue to be around 77.0 billion Canadian dollars in the fourth quarter. Also, the revenue could rise more in fiscal 2021. Marijuana legalization in more US states could boost sales. Legalization efforts took a hit in many states amid the pandemic. However, some states have continued their efforts to legalize marijuana.

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Aurora Cannabis could report an EBITDA loss again this quarter. Overall, the EBITDA loss could be around 40.2 billion Canadian dollars compared to a loss of 36.5 billion Canadian dollars in the third quarter of fiscal 2019. Sequentially, the losses could be less than 80.2 billion Canadian dollars in the second quarter. However, analysts expect the EBITDA losses to reduce from the fourth quarter. Aurora Cannabis could report a positive EBITDA of 2.3 billion Canadian dollars by the third quarter of fiscal 2021.

Analysts have a bearish view of Aurora Cannabis

Analysts have a bearish view of the company. Aurora Cannabis consistently missed its own profitability and revenue targets. Also, the company’s leadership team tumbled, which made analysts more skeptical. Aurora Cannabis’s stock price took a hit and started trading lower than $1 on the NYSE. The company faced the risk of delisting. Aurora Cannabis announced a reverse stock split. The company executed its 1-for-12 stock split on Monday. The main intention was to save the stock from delisting and maintain the cash position to survive amid COVID-19.

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After the stock split, Cowen and Company cut its target price for the stock from 30 Canadian dollars to 12 Canadian dollars. According to TheStreet, Cowen analyst Vivien Azer said, “We have a market perform rating on ACB. With one of the largest production capacities among the LPs, ACB has gotten off to a solid start in the Canadian adult-use cannabis industry (an estimated C$12 billion by 2025.”

Currently, 17 analysts cover Aurora Cannabis stock. Among the analysts, one recommends a “buy,” 12 recommend a “hold,” three recommend a “sell,” and one recommends a “strong sell.” The average target price on the stock is 20.18 Canadian dollars.

Upcoming earnings

Besides Aurora Cannabis, many other cannabis companies are posting their earnings this month. Tilray (NASDAQ:TLRY) posted disappointing results. To know more, read Tilray Posts Q1 Results, Stock Falls, and Net Losses Widen. Meanwhile, Cronos Group’s (NASDAQ:CRON) revenue rose in the first quarter. Analysts seem bullish before Charlotte Web’s first-quarter earnings.

On Monday, Cronos Group stock fell 2.7%, while Tilray rose by 3.8%. Meanwhile, Aphria and Canopy Growth (NYSE:CGC)(TSE:WEED) fell by 5.2% and 2.4% on the same day.

At 9:55 AM ET today, Aurora Cannabis stock is trading 6.95% lower. We’ll know more about the company’s current financial position and its plans for 2020 after its earnings on Thursday.


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