Tilray stock has been on a downward trend, causing Tilray Inc (NASDAQ:TLRY) to lose its market position with an estimated 8% market share in Canada as well as its production growth.
Concerns On Production Ramp
Investors are not expecting much growth from Tilray compared to peers because of concerns related to its production ramp. The production ramp is expected to produce less in terms of total production as compared to bigger rivals such as Canopy Growth Corp. (NYSE:CGC) and Aurora Cannabis Inc. (NYSE:ACB).
Tilray stock is currently trading at a third of its valuation down from its all-time high of $150. Although Tilray stock is currently undervalued by its over-inflated value, the company nonetheless needs to sustain significant growth targets so that it can be in a position to keep its stock price afloat.
Several analysts have revised their earnings estimates for the company as they anticipate growth to slow down because of pricing and because of Tilray’s pre-existing production. Equally, analysts are considering the fact that the company does not give production figures per facility but instead provides total production figures by facility size, which can lead to different revenue scenarios in the long run.
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Analysts Trim 2019 and 2020 Estimates
Michael Lavery of Piper Jaffray states that Tilray Inc does not focus on short-term growth like its competitors although it does seem to be well positioned for long-term success. He is revising his Q1 2019 revenue estimates, trimming estimates by $9 million; this reduction reflects the uncertainty in industry sales growth. For 2020, Michael estimates revenue to be around $710 million, and he has revised his price target on Tilray stock downwards from $90 to $84.
Jeffries analyst Owen Bennett has projected 2020 revenue to be around $311.7 million, which demonstrates the assumptions associated with the production ramp. He also set a low price target for Tilray stock at $61.
However, investors have been given hope following Tilray's acquisition of Natura Naturals, which should help to boost its growing capacity.
Tilray stock is down over 1.50%, now selling at $49. What do you think TLRY stock?
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