Aurora stock continues to move lower after an analyst at Stifel Nicolaus downgraded Aurora Cannabis (TSX:ACB) (NYSE:ACB) following last week's disappointing earnings.
Another Disappointment
Over the past year or so, a few companies have firmly established themselves as the leaders of the cannabis industry and Canadian outfit Aurora Cannabis is certainly one of them. However, it has not been a great day in the markets for Aurora as shares tanked after a Stifel Nicolaus analyst downgraded ACB stock from hold to sell. It can be a damning verdict for any company and Aurora stock plunged by as much as 7% on Monday.
Analyst Andrew Carter stated that it is time to sell Aurora stock due to the disappointing results in the latest quarter.
In his report, Carter slashed his target from $7 to $5 and considering the fact that the shares ended last week at $5.95 USD, that’s a significant cut. Although the company managed to grow its total sales by as much as 52% in Q4, it needs to be pointed out that it fell short of estimates and the average selling price dropped by an alarming 16.85%.
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Carter pointed out that due to a range of uncertainties that have affected the entire sector, it will be difficult for the company to properly finance its operations.
At the time of writing, Aurora stock is down 6.61% at $7.35 CAD; on Thursday, the stock was down about 10%.
Carter stated, "We believe Aurora's financing efforts will be challenged against the backdrop of overwhelmingly negative investor sentiment towards the sector, damaged credibility, and limited catalysts near-term to drive enthusiasm for the shares." Although it is true that the company’s sales price has been affected due to higher competition in the recreational marijuana market, the growth generated on the sales front cannot be questioned.
The company revealed that in fiscal 2019, it managed to produce 57,442 kilos of cannabis and in the process managed to raise its production by as much as 349% year-on-year. The company’s net cannabis revenue for fiscal 2019 also showed significant growth from the previous quarter and soared to $94.6 million CAD, reflecting a sequential growth of 61%.
Aurora stock has lost almost 45% since mid-March.
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