Aurora Cannabis Offers This Latest Evidence Of "Rebound" For Marijuana Stocks - from being down 56% since 2016. Rebound as in "dead cat bounce."
Aurora Cannabis (ACB) expected to produce more weed than once expected during its fiscal fourth quarter, and the Canadian cannabis producer forecast stronger margins and more kilograms sold during the period. The company estimates total net sales of 100 million-107 million Canadian dollars, with the midpoint of that range representing a 59% jump. SP+GTM forecast sales of $87 million U.S., or 115.1 million Canadian dollars. Aurora forecast cannabis sales of 90 million-95 million Canadian dollars, helped by gains in Canadian recreational sales as well as domestic and global sales of medical marijuana.
The company also said it expected production available for sale would be at the higher end of a range of 25,000-30,000 kilograms. That forecast was above an earlier outlook for 25,000 kilograms.
Aurora also projected quarter-over-quarter improvement in gross margins, kilograms of weed sold, and cash costs per gram. The company said it would release full results at some point before Sept. 15.
The preliminary figures from Aurora represent the latest evidence of a rebound for marijuana stocks, as the industry tries to overcome shortages and other hitches in supply, packaging, and distribution. Last week, Aphria (APHA) lifted the sector after reporting better-than-expected results. Aurora Cannabis stock gapped 11% higher in the stock market today. The move higher on Tuesday helped it rebound from a decline that began in March. Still, the company has a weak Composite Rating of 18. Its EPS Rating, a measure of profit growth, is 3.
The marijuana industry is losing money as it tries to grow. Aurora Cannabis stock sank last month after Bank of America Merrill Lynch analysts raised concerns about the rate at which the company is chewing through cash.
Stifel analyst Andrew Carter said Aurora's preliminary figures likely meant more strength in the company's recreational weed business.
"Most important, Aurora has now moved within striking distance of Canopy Growth in market share," Stifel analyst Andrew Carter said in a research note. Canopy Growth (CGC) is seen as the market-share leader in Canadian recreational cannabis. Stifel has estimated that Canopy Growth shipped 33.4% of Canada's recreational marijuana over the fourth calendar quarter of last year and first quarter of this year. Aurora, the firm estimated, shipped 17%. He also said that Aurora's production forecast suggested it made "significant progress" in bringing more production resources online. And he said the outlook suggested that its massive Aurora Sky facility was "close to achieving its full run-rate," providing more confidence as it wraps up construction on its Aurora Sun facility.
Other Marijuana Stocks Mixed
Among other marijuana stocks, Canopy Growth added 3%. Tilray (TLRY) was roughly flat. Cronos Group was up 1.15%. Aphria was mostly unchanged after rising earlier. Hexo (HEXO) rose by 3.6%. CannTrust (CTST) gained 4.2%. Organigram (OGI) was up 1.6%. Sundial Growers (SNDL) jumped by 6.4%.