Aurora stock has the potential to double next year, according to Canaccord's Matt Bottomley, who has set a $13.50 CAD target for Aurora Cannabis (TSX:ACB) (NYSE:ACB).
Legalization 2.0: The Catalyst for Aurora Stock?
While Aurora stock has been struggling throughout 2019, Bottomley believes the world's second-largest cannabis company has everything in place to kick on in 2020 and double its share value. One of the main factors for this speculative price target is the passing of legalization 2.o next month in Canada, which will see cannabis derivative products go to market by mid-December, and should offer a significant boost for the industry as it looks to recover from a summer slump.
Aurora stock dropped more than 8% when the company reported weaker than expected quarterly results earlier this month and walked back on its aim to turn a profit in 2019. Revenue of $98.9 million CAD represented a 52% increase from the previous quarter and 416% from the same period last year, but it still fell short of analysts' expected figure of $108.3 million CAD. Aurora shares were further hampered after Aurora Cannabis reneged on its profitability target, simply stating that it was “on track” to achieve this goal in the future.
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Not Everyone's Feeling Optimistic
Not all analysts are as optimistic as Bottomley, with Stifel's W. Andrew Carter recently lowering his rating for Aurora stock from "hold" to "sell" and reducing his price target from $7.00 CAD to $5.00 CAD. Carter believes that Aurora's fourth-quarter report shows that the company is nowhere near to achieving profitability, and doesn't expect this to change anytime soon, as he cut his forecast for Aurora's full-year revenue from $600 million CAD to $485 million CAD.
One major issue that Aurora Cannabis faces going forward, which analysts seem to have reached a consensus on, is the need for external financing in order to keep up with some of its major competitors. Aurora has yet to secure increased financing save for selling a significant portion of its stock to a larger pool of investors, unlike rivals Canopy Growth (TSX:WEED) (NYSE:CGC), which secured a $4 billion CAD investment from Constellation Brands (NYSE:STZ), and Cronos Group (TSX:CRON) (NASDAQ:CRON), which received a $1.8 billion investment from tobacco giant Altria (NYSE:MO).
Aurora stock is currently valued at $6.82, which is up over 2%, and while it's impossible to tell exactly how much of a catalyst effect legalization 2.0 will have, investors will be hoping that the worst of Aurora's troubles are behind it.
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