stock (ACB) has already jumped more than 81% since the start of the year, but recent management meetings keep Cowen & Co.'s Vivien Azer confident that it can keep going higher.
The Back Story . Cannabis stocks are a volatile bunch, as is Alberta-based Aurora, but the good news has outweighed the back in 2019. The company's acquisition of Whistler Medical Marijuana drew cheers in January, as did its earnings in February. Aurora is a wave of enthusiasm on Wall Street, as investors and other consumer companies to get exposure to the market for legal marijuana. The road to legalization may be a longer, more winding one in the U.S. than in Canada, but analysts are optimistic about Aurora's outlook. Last Wednesday, Azer named Aurora here top pick in the Cannabis space. The stock popped double on the news, and then proceeded to rise another 14% through Thursday's close.
What's New . A big chunk of Aurora's recent rally comes from news earlier this week that Nelson Peltz is joining the company as a strategic advisor. As Barron's reported, Peltz will work with Aurora to "explore potential partnerships that would be the optimal strategic fit for successful entry into each of Aurora's contemplated market segments" and advise on its global expansion.
Azer spoke with Aurora's Chief Corporate Officer Cam following the news, and writes that “Peltz should help open a number of doors for ACB if they develop their next legs of growth.” Battley customs here that the billionaire had been providing company with advice for months informally, and Azer does not see this as an activist coming in to change the existing business model, but rather to help accelerate performance. Given Peltz's fixed Rolodex of contacts… Aurora believes that they have ally who will be able to provide counsel on strategic partnerships, including partner selection, timing and structure. ”
Looking Ahead . Azer was upbeat on Aurora before the news, calling it not only her No. 1 pick in cannabis, but also her third favorite idea in all her coverage. Yet she thinks the alliance will bear even more fruit. She reiterated in Outperform rating and $ 14 price target on the Canadian shares.
She notes that Aurora has “taken a more patient approach to partnership selection, aided by Peltz's counsel,” and she expects the company to make “at least one partnership during 2019,” which may or may not be an equity investment similar. to the
(CRON) combination, or the deal between
Azer also believes that the company and Peltz share a strategy of not offering shares too early in their growth; that reflects a confidence in the growth trajectory and should result in a higher valuation. She also thinks that the structure of Peltz's compensation-his options for 20 million shares vest over four years, with various incentives — bodes well, and the arrangement is “a win-win for both parties.”
Aurora's American shares are down 0.8% to $ 8.92 this morning
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