The U.S.-listed shares of Aurora Cannabis Inc. tumbled 7.5% toward a 2 1/2-year low in morning trading Friday, after BofA Securities analyst Christopher Carey turned bearish on the Canada-based cannabis company, citing balance sheet concerns and a lack of visibility "on several fronts." Post cut his rating to underperform, after being at neutral for the past six months, and slashed his price target by 63%, to C$1.50 from C$4.00. The new target is 33% below the Canada-listed stock's current prices. Post said he expects balance sheet risks to remain a core investment thesis in 2020, with "lingering uncertainty especially on financial covenants." He said he struggles to envision a scenario where the shares have "sustainable" support. He expects "viability issues" to carry into the second half of this year as cash remains tight, meaning a key upside catalyst is unlikely to materialize, "absent an extraordinary event." Post's downgrade comes after Piper Sandler's Michael Lavery lowered his rating to sell and his price target to $1, also citing balance sheet concerns, as well as weak European Union sales. Aurora's U.S.-listed stock, which is on track for the lowest close since July 2017, has plunged 54% over the past three months, while the ETFMG Alternative Harvest ETF has dropped 11% and the S&P 500 has gained 12%. Read More...
The U.S.-listed shares of Aurora Cannabis Inc. tumbled 7.5% toward a 2 1/2-year low in morning trading Friday, after BofA Securities analyst Christopher Carey turned bearish on the Canada-based cannabis company, citing balance sheet concerns and a lack of visibility “on several fronts.” Post cut his rating to underperform, after being at neutral for the past six months, and slashed his price target by 63%, to C$1.50 from C$4.00. The new target is 33% below the Canada-listed stock’s current prices. Post said he expects balance sheet risks to remain a core investment thesis in 2020, with “lingering uncertainty especially on financial covenants.” He said he struggles to envision a scenario where the shares have “sustainable” support. He expects “viability issues” to carry into the second half of this year as cash remains tight, meaning a key upside catalyst is unlikely to materialize, “absent an extraordinary event.” Post’s downgrade comes after Piper Sandler’s Michael Lavery lowered his rating to sell and his price target to $1, also citing balance sheet concerns, as well as weak European Union sales. Aurora’s U.S.-listed stock, which is on track for the lowest close since July 2017, has plunged 54% over the past three months, while the ETFMG Alternative Harvest ETF has dropped 11% and the S&P 500 has gained 12%.
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