Aurora Cannabis Analyst Says 'Profitability Is Not On The Horizon'

Aurora Cannabis Inc. ACB shares were falling Monday after a weekend announcement that CCO Cam Battley is stepping down.

The Aurora Analyst

MKM Partners’ Bill Kirk reiterated a Sell rating on Aurora and lowered the price target from CA$3 ($2.28) to CA$2 ($1.52).

MKM's Aurora Thesis 

“Mr. Battley was one of the strongest voices for the industry,” Kirk said in a Monday note, adding that the resignation is the third important management change among top cannabis companies this year. (See the analyst's track record here.) 

Aurora filed an insider transaction Friday after the market close, the analyst said: director Jason Dyck sold 1.08 million shares at CA$3.095, which accounted for 57% of his holdings, leaving him with 791,402 Aurora shares.

The abrupt departure during a time of insider selling and sector chaos does not send an encouraging message to investors, Kirk said. 

“Directors selling and executives leaving give us increased confidence that profitability is not on the horizon and Aurora's 2.0 products will do little to turn the ship.”

Profitability will only worsen for growers, with prices already, he said. 

Legal market consumption demand is covered by the top seven producers, the analyst said. 

“Most new, legal markets have shown decreasing profitability for cultivation, yet consensus expects Canadian LPs like Aurora to defy precedents.”

MKM projects that Aurora will not reach positive free cash flow until fiscal year 2025. 

Aurora Price Action

Aurora shares were down 7.35% at $2.08 at the time of publication. 

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Photo courtesy of Aurora Cannabis.