Tilray, Inc. (NASDAQ: TLRY) (TSE: TLRY) is a pharmaceutical, cannabis-lifestyle and consumer packaged goods company. It is focused on medical cannabis research, cultivation, processing and distribution of cannabis products across the world. The company’s products include dried cannabis and cannabis extracts.
Based out of New York, Tilray also has operations in Canada, Australia, New Zealand, and Latin America, with growing facilities in Germany and Portugal.
TLRY stock closed 1.6% up on Tuesday. Further, it was trading 0.5% higher in the pre-market session on Wednesday.
Q3 Results
Earlier this month, the company reported financial results for the fiscal third quarter ended February 28.
Net revenues increased 23% year-over-year to $152 million, beating the Street’s estimate of $123.9 million. The rise was driven by a 64% increase in beverage alcohol revenue and a 32% rise in cannabis revenue.
EPS came in at $0.09, compared to a loss of $1.03 in the year-ago quarter. Gross margin rose to 26% from 25% in the previous year.
Irwin D. Simon, the Chairman and CEO of Tilray, said, “Our third-quarter results reflect progress and momentum across all of our key business segments and geographies, setting the stage to achieve our target for $4 billion in revenue by the end of Fiscal Year 2024.”
Further, the company expects to achieve cost synergies of $80 million from the Aphria acquisition by May 31 — five months ahead of the original schedule. Additionally, the deal is likely to generate synergies of $20 million in the Fiscal Year 2023.
Wall Street’s Take
Following the announcement of the third-quarter results, MKM Partners analyst William Kirk maintained a Hold rating on the stock with an $8 price target (37.2% upside potential).
Kirk said, “Tilray’s adjusted EBITDA was lighter-than-expected at $10.1 million. Additionally, the cannabis segment’s adjusted gross margin showed signs of pricing pressure, which contracted to 33% from 39%.”
Pablo Zuanic of Cantor Fitzgerald reiterated a Hold rating on Tilray and raised the price target from $6.90 to $8.40 (44.1% upside potential).
Zuanic said, “We think the main takeaway from this quarter is the continued strength in the international business, with the company now in 20 markets.”
Moreover, Benchmark Co. analyst Mike Hickey reaffirmed a Hold rating on the stock but refrained from providing a price target.
Hickey said, “We expect continued competitive pressure in the Canadian market will challenge market share expectations.”
Tilray currently holds around 10.2% share of the Canadian cannabis market.
Overall, the stock has a Hold consensus rating based on two Buys and six Holds. Tilray’s average price target of $9.26 implies 58.8% upside potential from current levels.
Conclusion
The recent approval by the lower house of the U.S. Congress to legalize marijuana has renewed hope among cannabis stock investors. Even though the chances of the upper house passing the bill looks bleak, the news has given a much-required boost to Tilray stock.
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