Cannabis stocks were mostly higher Tuesday, as investors digested Tilray Inc.’s earnings and the latest moves by New Jersey and Pennsylvania to pave the way toward legalization.
said late Monday quarterly sales grew to $15.5 million, up from $5.1 million in the year-ago period, topping the $14.1 million FactSet consensus. Tilray said the average net selling price per gram of pot increased to $7.52 from $7.13 in the year-ago quarter.
But its losses widened to $31 million, or 33 cents a share, from $2.9 million, or 4 cents a share, in the year-earlier period. That was wider than the 14 cents FactSet consensus. The stock initially rose in after-hours trade but fell 2% in official trade Tuesday.
Jefferies analyst Owen Bennett said the stock is still the most expensive in the sector “and yet its revenue trails “significantly below closest peers.”
Canopy Growth Corp.
generated C$63 million ($47.5 million) revenue in its latest quarter, while Aurora Cannabis Inc.
raised C$41 million, he wrote in a note to clients.
“We would also expect CannTrust
to not be too far off Tilray’s number when it reports (and CannTrust has a market cap of C$1.3bn vs Tilray at C$8.7bn). We’d also add that due to limited capacity, Tilray has needed to buy in part of its Canadian supply third-party (weighing on margins).”
Jefferies rates Tilray stock as underperform and has a $61 price target, which is about 15% below its current trading level.
Benchmark analyst Mike Hickey was more bullish, praising a strong sales result and accelerated distribution in export markets.
“Key sales catalysts include the upcoming legalization of cannabis edibles in Canada and the U.S. CBD market,” Hickey wrote in a note to clients. Canada Health is expected to to legalize edibles in the fourth quarter and expects limits on potency per serving, sweeteners and coloring and the possible requirement of separate manufacturing facilities.
He reiterated his buy rating on the stock and $200 price target.
Read also: GW Pharma announces sale of priority review voucher for $105 million
Tilray Chief Executive Brendan Kennedy said demand from U.S. and European markets were “orders of magnitude larger” than from Canada and said he would focus his company’s ambitions on overseas markets.
See now: Hexo shares a bright spot in weak cannabis sector as revenue jumps in latest quarter
“So while Canada will continue to be an important market for us, we expect to focus the majority of future investments on the U.S. and Europe,” Kennedy said in the company’s conference call late Monday. “We will not purchase or invest in what we believe to be overpriced . . . assets in Canada, which we believe will erode in value, medium-term to long-term, as the market normalizes.”
For more, read: Tilray stock rises after the company shows it can sell recreational pot
In New Jersey, lawmakers voted to approve bills that would legalize cannabis and provide for the expungement of prior convictions.
“When I think of [the bill], I think of two words: opportunity and hope,” Assemblywoman Annette Quijano (D), who sponsored the legislation, said at the hearing, according to Marijuana Moment, a website that works with activists, industry representatives and policy makers on trends affecting cannabis.
Read also: Why New York’s plan to legalize cannabis for adult recreational use is a big deal
Pennsylvania Senators released the first details of a cannabis legalization bill, that also seeks to address social equity and small businesses, according to a separate Marijuana Moment report. The bill outlines how universities would be allowed to grow and process cannabis as part of courses on the industry. It would allow consumers grow up to six plants at home.
Meanwhile, Florida has ended a ban on smokable cannabis that is expected to led to tens of millions of dollars in new sales. Gov. Ron DeSantis signed a bill Monday that was passed by lawmakers last week, although it will now pass to regulators to determine the details.
Canopy Growth Corp. stock
was up 1.6% and Cronos Group Inc.
was down 0.7%. Hexo Corp.
was up 3.4% and Aurora Cannabis Inc.
was up 0.8%.
Green Organic Dutchman Holdings Inc.
was up 8.9%, extending a recent rally. A number of houses have turned positive on that stock, including Jefferies, which initiated coverage with a buy rating in late February.
Aleafia Heath Inc.
was up 4.5% on its first day of trading on the Toronto Stock Exchange.
CannTrust Holdings Inc.
was up 4%, and OrganiGram Holdings Inc.
was up 1.4%.
The Horizons Marijuana Life Sciences ETF
was up 1% and the ETFMG Alternative Harvest ETF
was up 1.6%.
The S&P 500
was up 0.3% and the Dow Jones Industrial Average
was up 0.4%.
Additional reporting by Max A. Cherney in San Francisco
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