Analyst: Updating Tilray's Numbers Ahead Of Aug Qtr Print

Cantor Fitzgerald analyst Pablo Zuanic shared an update on Tilray's TLRY Aug qtr sales estimates in his Thursday note.

The Analyst:

Zuanic kept an “Overweight” rating on Tilray but tweaks the 12-month price target to US$18 from US$19 on lower sales estimates.

The Thesis:

Cantor reduced sales estimates to US$173M from US$185M due to slower than expected trends in Canada and COVID-related issues still impacting ancillary businesses.

According to Zuanic, the main driver of the stock performance of large Canadian LPs, in the last 12 months, has been the investor outlook for federal-level reform/legalization in the US.

While some acceleration had been expected as stores reopened to foot traffic, price deflation is a fact.

Average retail flower prices dropped to $6.09/gram, down 4% vs. the 2Q monthly average, and down 20% YoY. Flower prices for Tilray legacy are down 10% seq (while Aphria’s were stable).

"M&A action, building an 'ecosystem' in the US (a market potentially 10x bigger than Canada, according to management), and delivering on the “$4Bn by 2024” top-line vision will likely be the main drivers for this stock," Zuanic said.

The analyst projects:

• Sales of US$173M vs. FactSet consensus of $177M; 

• 3% proforma rec growth for the combined company (Tilray+Aphria); 

• Aphria’s legacy business (about 73% of the combined company’s rec sales) reduced by 4%;

• Tilray's legacy business incrementing 28% (driven by flower and prerolls), and; 

• 1% growth seq for the rec business.

• Price Action: Tilray's shared closed down 0.17% to $12.01 per share at the close of the market on Thursday.