Shares in Aurora Cannabis Inc. suffered during their worst trading period of more than five years Friday, following a performance report that included disappointing figures and plans to cut spending sent analysts competing to lower their forecasts for the Canadian marijuana producer.
revenue decreased 24% in its first quarter financials, and the second largest public weed company through sales canceled or delayed several additional plant extensions and converted $ 1
Analysts said that Investors had a reason for anger and mistrust after the report, and should think about whether it means it's time to escape the cannabis industry altogether.
"If Aurora is less eager to use capital for this industry, we believe that investors should also be reluctant to invest capital in the industry," wrote MKM Partners analyst Bill Kirk, who has a seal result and a $ 3 price target. on the share, in a note.
Jeffries analyst Owen Bennett found that dilution from the debt conversion can swing investor sentiment even more and believes that a write-down for a write-down of goodwill from the acquisition of MedReleaf may be underway. He also suggested that in addition to negative feelings, investor confidence could be a real issue after Aurora's optimistic statement before Thursday's disappointment.
"With possible cash pressure evident, announcing that construction was halted at the facilities despite a press release just 6 weeks ago praising the development now, EBITDA (and cash) looks positive as unlikely this year, it would be fair for investors not to believe them, ”wrote the analyst, who has a buy rating and $ 7 price target on the stock.
Nine analysts lowered their price targets on the stock, according to FactSet, while sales and revenue estimates were largely made. Stifel analyst W. Andrew Carter set the lowest price target tracked by FactSet when he lowered his to $ 2.80 from $ 3.50, while maintaining a seller rating.
"The company outlined a robust plan to cut the balance sheet, but even with C $ 500 million in established funding resources available, we believe the company's uncertain financial position offers very little room for error," Carter wrote. "We believe that the challenges to the current environment in the category provide little support for cannabis companies depending on the capital markets."
But not all analysts were sour about Aurora's announcements. The only change in rating came from Cantor Fitzgerald analyst Pablo Zuanic, who upgraded the stock to overweight from neutral while raising his price target to $ 5.85 from $ 5.10.
When Zuanic explained this movement listed four reasons: "We do not expect a worse quarter for the group," Aurora is in better shape than other cannabis companies, its full-year results show a strong understanding of the market and the movements announced on Thursday afternoon was "more decisive action" than rivals do.
"Kudos for the timeliness and depth of disclosure (best in class among the larger LPs) Zuanic wrote." We think this should stand for something. "
Cowen analyst Vivien Azer titled her revenue note," We now have cash, that's a good thing, "even though she dropped her price target to $ 6 from $ 8.
" With the Canadian cannabis industry under-whelming across the board, for one reason or another, ACB delivered on perhaps the most critical element: more cash, "wrote Azer, who maintained an unrivaled rating." In our view, management is taking a cautious approach to matching supply with demand, thus slowing down Given ACB's low cost production, it seems prepared to take advantage of its benefits. "
Seaport Global analyst Brett M. Hundley said his neutral rating would be reviewed, but said that at least Aurora tried to take control of
" These measures are expensive, but they keep Aurora in control of their own destiny, " wrote Hundley.
Following Friday's changes, 8 out of 17 analysts are tracked by FactSet label Aurora corresponding to a buy, while seven call it a hold and two rate the stock a sell. The average price target was $ 5.69, according to FactSet.