Aurora Cannabis (NYSE: ACB) shares edged lower by 7.4% on Monday after Stifel analysts recommended selling the stock and slashed its price target.
Stifel analyst Andrew Carter recommended his rating after Aurora reported disappointing quarterly results. As a result, Carter slashed his price target on the stock from CAD 7 to CAD 5 per share, representing a 36% decline.
Aurora reported its fourth quarter financial results last week on Wednesday. The following day, Aurora shares plunged by as much as 9% after the Company had missed expectations.
For the fourth quarter, Aurora reported a net loss of CAD 2.26 Million on revenues of CAD 98.94 Million. Analysts expected earnings loss of USD 0.06 per share on revenues of CAD 108 Million.
Carter wrote in a note to clients that Aurora’s quarterly results point to a “less robust in-market performance and difficulty to continue positioning for the larger global opportunity.”
Carter now believes that Aurora’s financing efforts will be “challenged” against “overwhelming negative investor sentiment,” leading investors to remain doubtful of the cannabis industry’s growth.
While Aurora reported much larger-than-expected losses, the Company reported that its net cannabis grew by 61% to USD 94.6 Million sequentially. On top of that, Aurora also reported that production volume increased by 86% quarter-over-quarter, while cash cost to produce per gram decreased by 20% to CAD 1.14 per gram.
The increase in revenue and production signals that consumers are in fact purchasing more cannabis, however, the concern within the cannabis industry is the ability for companies’ to profit.
Similarly, other cannabis giants such as Canopy Growth (NYSE: CGC), Cronos Group (NASDAQ: CRON), and Tilray (NASDAQ: TLRY) all reported increasing losses in their previous quarters.
Despite Aurora’s stock being hammered down in the past week, the Company’s share price is still up 11% this year.