Tilray Jumps 11% Pre-Market As 4Q Loss Narrows; Street Says Hold

Shares of Tilray surged 11% in pre-market trading on Feb. 18 as the cannabis producer’s fourth-quarter loss narrowed to $0.02 per share from a loss of $2.14 during the same period last year. Analysts were expecting a loss per share of $0.15.

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Revenues came in at $56.6 million, up by 20.5% year-on-year and ahead of consensus estimates of $55.7 million.

Tilray’s (TLRY) CEO, Brendan Kennedy, said, “Over the course of 2020, and despite COVID-19 related challenges, we transformed and strengthened Tilray, delivered solid full year results, significantly reduced net loss, and achieved our stated goal of delivering break even or positive Adjusted EBITDA in Q4 2020.”

Kennedy added, “We did so by generating meaningful revenue growth across our core businesses, particularly international medical and Canadian adult-use in Q4, and reducing costs by $57 million on an annualized basis compared to Q4 of 2019. As a result, we now operate with a more focused, efficient and competitive cost structure. We also strengthened our balance sheet and positioned Tilray for growth and success in the future in combination with Aphria.”

In December last year, the company announced a merger with Aphria (APHA) with a combined pro forma equity value of $3.9 billion and pro forma revenues of $685 million. The company expects to close the merger in the second quarter of this year. (See Tilray stock analysis on TipRanks)

A major driver for revenue growth in the fourth quarter was the cannabis segment with revenues up by 46% year-on-year to $41.2 million. Cannabis sales were mainly driven by international medical sales and Canadian adult-use sales in 4Q.

Following the earnings results, Oppenheimer analyst Rupesh Parikh assigned a Hold rating on the stock. Parikh said, “…TLRY management delivered positive adjusted EBITDA of $2.2M ahead of a consensus figure of $0.3M driven by a stronger gross margin delivery and benefits from stringent expense controls. We now await approvals for the Aphria combination, which is expected to close in Q2 2021.”

The rest of the Street is sidelined about the stock with a Hold consensus rating. That’s based on 1 analyst recommending a Buy, 6 analysts a Hold, and 1 analyst a Sell. The average analyst price target of $14.58 implies about 53.7% downside potential to current levels.