The Aurora cannabis stock is under the hammer; Here’s what you need to know

If anyone is looking for a successful cannabis story in 2020 … look away now. Aurora Cannabis (ACB) continues its relentless search for the bottom when the long-awaited change in sentiment has not materialized. Stocks are under pressure again and have lost nearly 70% since the start of the year.

The latest setback can probably be blamed on several disappointing news. Last week the Canadian cannabis producer provided investors with a business update and it is safe to say the news has not encouraged long-term suffering ACB holders.

Along with the fact that it now expects fourth quarter net sales to be down from the C $ 78.4 million reported in the third quarter to between C $ 70 million to C $ 72 million (also lower than Street’s C $ 77 million estimate), the company also said it expects record assets. impairment charge of up to Cdn $ 2.0 billion. Add to that the termination of a UFC partnership, which will include a one-time payout of US $ 30 million in 1Q21, and it all paints a disheartening and familiar picture.

For analyst Jefferies Owen Bennett, the disappointing update is further exacerbated by the choice of the new CEO. The position was finally filled with the appointment of Miguel Martin.

“One,” the analyst said, “Mr. Martin was just promoted to commercial director in July. The fact that he was given the CEO position so soon afterwards would suggest limited availability of suitable (or even interested) parties outside. At that, there were arguably more expectations of ACB given Nelson Peltz’s role as strategic advisor. Second, even though we don’t assume that Mr. Martin is not capable, and that he must be judged on results, it is easy to find loopholes in his experience of building international brands through a variety of distribution channels. “

To this end, Bennett notes that ACB stocks are underperforming (i.e. Sell). But Bennett might as well have said Buy, because he thinks the stock, currently at CA $ 9.29 (US $ 7.01), could reach CA $ 14.00 (US $ 10.62) by now. one year, offering 51% profit to new investors. (To look at Bennett’s record, Click here)

Aurora may not have Street’s full confidence, but overall Bennett’s colleagues are more positive. ACB’s Hold consensus rating is based on 2 buy, 7 take and 1 sell. At CA $ 16.82 (US $ 12.76), the average price target suggests that stocks will appreciate strongly by 81% over the next 12 months. (See Aurora price targets and analyst ratings on TipRanks)

To find great ideas for cannabis stocks traded at attractive valuations, visit TipRanks’ Best stocks to buy, a recently launched tool that brings together all the information about TipRanks equity.

Disclaimer: The opinions expressed in this article are solely those of the analyst presented. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

Source link

About Catherine Sherrill

Check Also

Meet People Online with these Apps and Sites Like Craigstlist Personals

If you were one of the unlucky ducks caught in between relationships while states were …