Tilray’s (TLRY) year-to-date price chart does not make for pretty viewing. On a merciless downward trajectory, the embattled marijuana stock has shed almost 70% of its value, from $70.46 at the turn of the year to its current price of $21.
The company released its third-quarter report on Tuesday with mixed results on offer. Looking at the positives, Q3 revenue year-on-year was up by over 400% to $51.1 million, beating analysts’ estimates of $49.4 million. On the other hand, EPS came in at a loss of $0.36, significantly above last year’s $0.20 for the same period and above analysts’ expectations of $0.29 loss per share.
The losses highlight two problems facing Tilray: The first (and the obvious one) is that the company is spending more than it is bringing in, and the second is that the acquisition of the world’s largest hemp foods manufacturer, Manitoba Harvest, completed earlier this year, is weighing heavily on the balance sheet right now.
Tilray hopes to achieve positive EBITDA by Q420, counting on more retail stores and higher-margin international sales to boost the coffers, but BMO’s Tamy Chen is not entirely convinced the cannabis producer is on its way to profitability just yet.
The analyst said, “Overall, we consider Q3/19 results to be a modest positive. Following operational challenges earlier this year, Tilray appears to now be making more meaningful strides in the roll-out of its rec and international medical platforms. While the company believes it has sufficient cash to fund operations until achieving positive EBITDA in Q4/20, we believe this may lead to a tight cash position during 2020 if the Rec 2.0 sell-in is more gradual than expected and/or there are opex overruns associated with the Rec 2.0 ramp.”
For now, Chen reiterates a Hold rating on Tilray stock, along with a price target of $27.00, which still implies about 24% upside from current levels. (To watch Chen’s track record, click here)
In contrast to Chen, 5-star Northland analyst Michael Grondahl believes Tilery is on the right path, noting, “We believe TLRY is still in heavy investment mode, but is setting the Company up for the long-term global market potential with a solid footprint already in the Canadian medical and adult-use markets (looking to get to 1,000 stores in Canada in 2020)… Tilray is pioneering the future of cannabis and we believe they are well prepared for this paradigm shift with their global strategy, multinational supply chain, distribution network and commitment to research, innovation, quality and operational excellence.”
So, what does the market make of Tilery right now? Well, the current view on the stock is a mixed bag. The stock has a Hold analyst consensus rating with 3 "buy," 7 "hold," and 1 "sell" ratings issued in the past 3 months. However, the $33.33 stock-price forecast suggests an upside potential of nearly 58% from current levels. (See Tilray’s stock analysis on TipRanks)