It seems to be the general consensus on Wall Street that even if Tilray does report the kind of fourth-quarter earnings that are expected, the company’s stock will be trading at a whopping 100-times annualized revenue, according to Barron’s.
According to NASDAQ, Tilray is expected to announce its fourth-quarter earnings after the market closes on Monday. We have to remember that when Tilray reported its third-quarter earnings in November, only two weeks of bulk shipments to provincial authorities was included.
At that time, Tilray had not sold any recreational marijuana. Chief Executive Brendan Kennedy said in the November conference call the fourth quarter would change all that. And to be fair, the Nanaimo, British Columbia-based company has been very busy.
In January, Tilray acquired Leamington, Ontario-based Natura Naturals Holdings Inc. in a deal that included $26.3 million in cash and stock. The deal may end up doubling the company’s domestic cultivation capacity.
Following the January acquisition, in February, Tilray announced a $317 million cash-and-stock deal for Manitoba Harvest, a company that claims to be the world’s biggest hemp food maker. Tilray aims to jump into the CBD-derived product market in the United States.
But can Tilray live up to its reputation?
As Market Watch says, for Tilray to live up to its $6.69 billion valuation, it will have to show it can sell just as much marijuana as its two closest rivals. Tilray has proven it can buy companies, but to keep investors happy, it needs to have some impressive earnings figures.
Jeffries analyst Owen Bennett wrote that Tilray’s share of medical cannabis sales was not within the top four of its rivals. “In many areas we see Tilray falling short of Canopy and Aurora,” he wrote in a note to clients.
“the approach to recreational doesn’t appear as well thought through, capacity could be limiting, positioning for derivatives doesn’t stand out amongst peer best, and optionality in the U.S. is less impressive.” Bennett ended up setting a price target of $61, which would bring the pricey shares closer to the valuations of its bigger peers Canopy and Aurora.
On Friday, Tilray shares closed at 72.50 +0.21 (+0.29%) on Friday.
