Aurora Cannabis stock price target cut by MKM as pot price weakens and black market thrives

Aurora Cannabis Inc.

MKM Partners analyst Bill Kirk cut his stock price target on Aurora Cannabis Inc. on Monday to C$3.50 ($2.65) from C$5.00, and said there is still some optimism in the stock “to shake and trim.”

Kirk cited three reasons for the move, namely a softening of pricing, a widening gap between legal and black market prices and fewer-than-expected new store openings in Ontario and Quebec. “Aurora warned on its September 12th earnings call that July and August had slowed, and including HEXOCorp’s HEXO, +8.47% HEXO, +0.60% commentary and pace of new stores, we have no evidence that September and early October were any better,” the analyst wrote in a note to clients.

Kirk, who rates Aurora a sell, was referring to a revenue warning from Hexo last week that shook the market. He said consensus expectations for a sequential rise in revenue are overdone. Kirk lowered his first-quarter fiscal 2020 sales estimate to C$98 million from a previous C$117 million, below the C$105 million consensus.

“We believe profitability for cultivators will generally get worse before getting better,” said the note. “Pricing is already decreasing and supply availability will continue to grow/improve.” Aurora shares were up 1.9% in premarket trade, but have fallen 26% in 2019, while the ETFMG Alternative Harvest ETF has fallen 25% and the S&P 500 SPX, +1.00% has gained 18%.

Capital markets, shares, stocks, and equity, etc. are covered by Jose . He applies his learned knowledge, and acquired skill from years of experience, to put out articles which are worth their length in gold. These pieces of writing encompass all major developments in markets, increase or decrease of tariffs, and the effect of each such deduction and increment in the economy of the nation. This in turn, shows the trajectory of the economy, and completes the whole of the Square Business News legacy!

Leave a Reply

Your email address will not be published. Required fields are marked *