It's only June, but it has already been a mixed year for Aurora Cannabis (TSX:ACB) (NYSE:ACB). Despite ACB stock being up more than 50% in 2019, the cannabis stock has dropped around 30% from highs hit in March. And today, June 6, things are looking worse for wear. Today, a Stifel analyst has warned investors to be cautious of the Edmonton-based company.
Here's what we know.
ACB Stock: Taking Another Hit
Earlier today, Aurora Cannabis received coverage from Stifel, an investment bank and financial services company. It wasn't what one would expect, though. According to Andrew Carter—Carter is the analyst who wrote the note to investors—Stifel is cautious on Aurora, mainly because the company's international medical-use growth opportunities are restricted outside of Germany and Canada.
Carter also warned investors of Aurora Cannabis' lack of strategy when it comes to entering the US cannabis market. Combining these factors, Carter decided to give ACB stock a 'Hold' rating.
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“We are cautious on Aurora in the near-term given the company's reliance on the capital markets to execute upon its near-term business plans, the lack of a definitive strategy for entering the U.S. market, and we believe the slower development of the global medical opportunity will yield downside versus consensus estimates."
The market isn't taking the news well, with ACB stock trading in the red Thursday. Although, this might not be solely due to Stifel's coverage on Aurora stock. Last week, shares lost 15% in five days, and ACB stock dropped after it released its Q3 report.
Whatever the reason, ACB stock is still trading down on a day where a handful of its counterpart cannabis stocks are thriving.
According to Yahoo Finance, ACB stock is trading at $7.57 on the New York Stock Exchange; this puts Aurora stock down 2.07%.
Takeaway
Just because ACB stock has been taking a few hits recently doesn't mean the company isn't in a good position. Even Carter recognizes that Aurora is, in Stifel's opinion, the second best cannabis producer in Canada. However, Carter says that the company doesn't seem to understand what it will have to do to defend that title as the cannabis market continues to grow.
What do you think? Was Stifel justified for giving ACB stock a 'Hold' rating? Let us know what you think in the comments below?
Featured image: DepositPhotos © AlexBrylov
