On July 28, Tilray (TLRY) stock rose 26 percent after the company reported better-than-expected results for the fourth quarter of fiscal 2021 (ended May 31). Will TLRY stock rise more or fall from the current levels?
Other marijuana stocks like Canopy Growth, Sundial Growers, Aurora Cannabis, and Hexo all rallied after a blockbuster earnings report from Tilray. The results are the first from Tilray after it merged with Aphria in May. The combined company became the world’s largest marijuana producer by revenue.
Tilray stock is rising.
Tilray stock rose significantly after the marijuana company reported a surprise profit for the fourth quarter. The company set an ambitious goal of reaching $4 billion in sales by 2024, assuming full legalization of marijuana in the U.S. Investors appear to be pleased with the company's progress amid challenges due to Canada’s coronavirus restrictions.
Tilray’s Q4 earnings beat the estimates
In the fourth quarter, Tilray reported an EPS of $0.18 compared to -$0.39 in the fourth quarter of fiscal 2020. The EPS beat analysts’ average estimate of -$0.12. Tilray generated sales of $142.2 million in the fourth quarter, 25 percent more than it did in the same period a year ago. The marijuana company just missed analysts’ average sales estimate of $142.9 million. Tilray’s adjusted EBITDA also increased 284 percent YoY.
Tilray’s stock forecast
According to Market Beat, analysts' average target price is $19.58 for Tilray stock, which is 24 percent above its current price. Among the 14 analysts tracking Tilray, five recommend a buy, while nine recommend a hold. None of the analysts recommend a sell. Their highest target price of $26 is 64 percent above the stock's current price, while their lowest target of $4.75 is 70 percent below.
TLRY stock is a good investment.
TLRY stock is a good buy based on its attractive valuations and strong growth outlook. In the fourth quarter, the company generated a free cash flow of $3.3 million compared to a cash burn of $28.3 million a year ago. Tilray has realized $35 million in cost synergies from the Aphria transaction and intends to meet its target of around $80 million within 18 months of closing. The company intends to increase its Canadian market share from roughly 16 percent now to 30 percent by 2024.
Tilray trades at an NTM EV-to-sales multiple of 8.8x, which looks attractively priced compared to other marijuana stocks. Canopy Growth and Cronos Group are trading at NTM EV-to-sales multiples of 11.8x and 19.6x, respectively.
Will Tilray stock rise more?
Tilray stock was down 4 percent on July 29 as of 9:52 a.m. ET. In the short term, the stock could see a sell-off as investors book profits. Any progress toward federal marijuana legalization in the U.S. might give TLRY stock another boost.
Tilray stock short squeeze
Tilray stock has become one of the most discussed stock on Reddit forums. According to Fintel, Tilray had a FINRA short volume ratio of 43.7 percent on July 28. It's a prime short squeeze candidate due to its high short volume and favorable business updates.