Cantor Fitzgerald Lowers Price Target On Tilray Cannabis Co Ahead Of Earnings Report, Sees Several Catalysts Including U.S. Plans

Canadian cannabis giant Tilray, Inc. TLRY is scheduled to report its quarterly earnings on July 28th, before the market opens. Year-to-date, the stock is up 35.12%.

Tilray, based in New York and Leamington, Ontario, recently confirmed that another independent proxy advisory firm is recommending that shareholders back all of the company’s proposals at a special meeting scheduled for July 29. This time, the proxy advisory services company Glass Lewis also advised shareholders to vote in favor of the company’s dilution as well as other proposals. 

The Analyst

Cantor Fitzgerald’s Pablo Zuanic kept an ‘Overweight’ rating on Tilray's stock but lowered the price target to $19 from $24.

The Thesis 

The combined company’s May quarter report will include a full quarter of the old Aphria (through May) and one month of the old Tilray as well as Pro-forma numbers by division for the 12-month period ending May, wrote Zuanic in a Tuesday analyst note.

See also: How to Buy Tilray Here (ACB) Stock 

“So, we will not be able to judge cannabis sales trends (what really matters, in our view).”

Tilray is expected to report a flat quarter with share loss coming from Aphria and gains from Tilray, noted Zuanic, explaining that lowering the price target is due to the recent sectorial derating.

The analyst expressed concern that the headline consensus numbers are not accurate “as it is a blended comparison of apples to oranges.” The FactSet consensus projected $193.3 million sales for the quarter, which, according to Zuanic, “does not seem right” since there was no sequential growth. Without it, the numbers should be around $140 million.

“Our pro forma numbers for the May quarter are $175Mn (or about 5% down sequentially).”

The analyst further listed several possible catalysts from the financial report: 

• Domestic recreational outlook;
• U.S. plans;
• Overseas growth commentary;
• Dealing with the convertible debt. 

The Price Action 

Tilray’s shares were trading 6.68% lower at $12.79 per share at the time of writing.

Photo: Courtesy of Esteban Lopez on Unsplash