Even after soaring by more than 125% over the past week, shares of Aurora Cannabis (NYSE: ACB) still have plenty of upside.
So says investment bank Ladenburg Thalmann, which reiterated its buy rating on Aurora's stock on Monday. Even after cutting his price target in half, analyst Glenn Mattson says Aurora's shares are still worth significantly more than the price at which they're currently trading. Mattson thinks the marijuana industry leader's stock is worth at least $18, which is about 24% more than shares were fetching at 1:15 p.m. EDT Tuesday.
Aurora Cannabis's stock is still a buy, according to analysts at Ladenburg Thalmann. Image source: Getty Images.
Mattson commended Aurora for its better-than-expected sales growth in its fiscal third quarter, which ended March 31. The cannabis producer's total net revenue surged 35% sequentially to $75.5 million, driven in part by a 24% jump in recreational consumer cannabis sales to $41.5 million. Those figures were well above Mattson's projections for total net revenue and consumer cannabis sales of $67.6 million and $36.6 million, respectively.
Mattson also applauded Aurora's newfound financial discipline. The previously free-spending company has instituted a series of cost-reduction initiatives to slow its cash burn and shore up its balance sheet. In light of these efforts, he believes Aurora will soon begin to generate positive cash flow from its home market of Canada.
"We think ACB can become a solid cash flow generator simply from the Canadian operations and, with a strong market position in Canada, the company can create significant value from here based on this one market," Mattson said.
Looking ahead, he expects Aurora to eventually build a significant presence in the U.S., where marijuana sales are forecast to be as much as 12 times higher than the Canadian cannabis market by 2024.
"We do think that it will look to expand into the U.S. but not until federal legality is more clear," Mattson said.
10 stocks we like better than Aurora Cannabis Inc.
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Aurora Cannabis Inc. wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of April 16, 2020
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
