Aurora Cannabis deemed top pick by market analysts

Aurora Cannabis deemed top pick by market analysts

Cowen analyst Vivien Azer continues to put her reputation behind the company

Certain analysts have chastised Aurora Cannabis (TSE: ACB) for not spending enough time developing itself for the US cannabis market. However, the company has seen the future and realizes that a global presence will have much more potential in the long run. With US legal cannabis still several years away – even if federal lawmakers approved reform tomorrow – Aurora and its top brass are concentrating on getting the company anchored in various parts of the world for a global market, not just a regional one. Vivien Azer, an analyst with Cowen, started covering Aurora recently and said that it has a very bright future. She’s back again, this time predicting that the leading cannabis company will perform better than other analysts may believe.

Azer has given Aurora an “outperform” rating with a price target of $11.38. She acknowledges that several cannabis companies are looking to be global competitors, but asserts that only Aurora is in a position to begin to see profits in the near term. She argues that Aurora’s second-place position to Canopy Growth Corp. may not last, given the latter’s recent revelation that it lost around $74 million in the first quarter.

The analyst adds, “While a number of peers have communicated a longer pathway to profitability, [Aurora Cannabis] has the opportunity to be among the few Canadian LPs to reach positive EBITDA [earnings before interest, taxes, depreciation and amortization] as soon as 4Q19 (ending June 30), which is a particular standout as category leader WEED posted an expanded EBITDA loss in calendar 1Q19 (at -C$98 mm).”

Azer also believes that a transition toward the extract and novel form factor industry will also help Aurora and that the Canadian adult-use market, expected to be worth around $9 billion within six years, is going to boost the company’s profits. With an international medical cannabis market worth around $31 billion within five years, Aurora is already positioned to capitalize on sales of a range of cannabis products.