Cannabis Watch: Aurora Cannabis stock dips as earnings show another sales miss, but narrowing losses

It was the fourth consecutive quarter, and the eighth out of the past 10, that Aurora missed sales estimates, according to FactSet records. The company beat expectations for the bottom line for the first time since the same quarter in 2019, however.

Aurora’s U.S.-listed shares declined 2.4% in after-hours trading following the disclosure, giving back gains experienced during the regular session, when the stock gained 2.5% to $7.48. Aurora’s shares have struggled for more than two years amid an executive shake-up, reverse stock split and hefty losses, losing more than 90% of their value in the past three years and falling 10.3% so far this year.

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The current management team is hoping to cut away some of the fat to show an improving bottom line to investors, and is focusing more on high-margin medical cannabis than the Canadian recreational market, which has trended toward cheaper pot. Aurora disclosed Tuesday that medical cannabis revenue increased 23% year-over-year to C$41 million, while recreational sales declined 44% to C$19.1 million.

The goal for Aurora executives for some time has been achieving some form of profitability, and the timeline given Tuesday was roughly a year until reaching adjusted profit.

“Our strong adjusted gross margins and narrowing adjusted-Ebitda loss are also providing us with a clear path to profitability by the first half of fiscal 2023 as we position ourselves for long-term success,” Chief Executive Miguel Martin said in a statement included with Tuesday’s announcement.

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As for the company’s previously stated ambitions to pursue a potential acquisition of a U.S. marijuana company, Martin sounded noncommittal in a conference call Tuesday.

“So when you think about our overall goal of Ebitda profitability, we’re not going to put that into risk by looking for a nontraditional investment,” he explained after the first question, from a retail shareholder, asked about plans for the U.S. market. “That being said, with the right opportunity, we have the balance sheet and financial flexibility to be opportunistic when we see the right transaction.”

“I think everybody has been [so] focused on the U.S. that people forget that there’s a huge world out there with positive cannabis legislation and regulations evolving,” Martin said in response to a later question. “We’ve talked about Germany; we’ve talked about U.K.; we’ve talked about key markets like Australia. But the reality is these are really big markets with huge opportunities.”

Analysts have largely warned investors to avoid Aurora as it continues to struggle. As of Tuesday afternoon, none of the 14 institutional analysts tracked by FactSet rate the stock a buy, with eight calling it a hold and six rating the stock the equivalent of sell. The average price target was $5.80, more than 20% lower than current trading levels.