Analysis: Aurora Cannabis Could Improve Position Based On Exports, Jushi Price Target Adjusted Down

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Cantor Fitzgerald released two reports ahead of featured chats with the CEOs of Aurora Cannabis (NASDAQ:ACB) (TSX:ACB) and Jushi Holdings (CSE:JUSH) (OTCQX:JUSHF).

On Aurora, analyst Pablo Zuanic stayed Neutral but increased the 12-month price target to CA$9.50 from CA$8.30 on increased export projections. Aurora stock was CA$9.10 ($7.22) at the time of this writing on Tuesday afternoon.

Aurora’s recreational shipments in the March quarter were hurt by wholesaler destocking, while June shipments were flat as trade inventories normalized, said Zuanic in the report.

“So, now for the Sept quarter, we would expect rec shipments more in line with retail trends. There is little evidence the strategic pivot in domestic rec is working. That said, domestic rec only accounted for 6% of ACB’s June quarter gross profits, with exports and domestic medical sales contributing the bulk of earnings.”

Zuanic stated that Aurora continues to hold a number one position in Canadian medical cannabis sales, although this market segment lacks growth momentum.

The company is among the two Canadian LPs with the best export momentum, when taking Israel and Europe exports into account.

According to the analysis, Aurora should book CA$9 Million ($7.1 million) in exports to Israel in the December quarter and expects to be a key participant in markets such as Germany, Poland and France, projecting these three countries will reach a total of CA$3.2 billion in sales by 2025.

“We think the pace of export growth will be a key factor in ACB’s ability to deliver positive EBITDA in the coming quarters,” Zuanic wrote. 

For Jushi, the analyst also stayed Neutral but lowered the 12-month price target to $4.00 from $4.80 due to sectoral derating. The stock was selling at $3.87 at the time of this writing.

“We remain Neutral, although we recognize expansion plans and VA rec optionality could result in EBITDA growth well above the peer average,” wrote the analyst.

  • With increased wholesale price competition coming from MedMen (CSE:MMEN) (OTCQX:MMNFF), companies with a heavier retail model like Jushi may benefit if spreads are maintained, Zuanic opined.

Lead image by Ilona Szentivanyi. Copyright: Benzinga.