Cantor Fitzgerald On Aurora Cannabis: Buy The Dip

Shares of Aurora Cannabis Inc ACB have declined by 30% over the past 32 days, versus a 10% pullback in its direct peer group.

The stock has come under pressure due to analyst downgrades and “misplaced market chatter,” according to Cantor Fitzgerald.

The Aurora Analyst

Pablo Zuanic maintained an Overweight rating for Aurora Cannabis with a CA$5 ($3.83) price target.  

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The Aurora Thesis

The stock reaction following the resignation of CCO Cam Battley seems misplaced, and Aurora Cannabis could benefit from “some pruning” and appointing an outside CEO who is well-known for sound growth strategy and financial discipline, Zuanic said in a Monday note. (See his track record here.) 

The market has speculated about asset writedowns, with Aurora Cannabis listing a property for sale at a price much lower than its book value, the analyst said. 

Yet the asset was being sold “pretty much at book value,” and it was one that was unnecessary — and in-line with the company’s plans to scale back capital expenditures, he said. 

“We see this as good and not bad news,” Zuanic said. 

Referring to the market’s perception of Aurora Cannabis being at risk of breaching debt covenants, the analyst said the company seemed to be “in compliance with all covenants under the amended credit facility and term loans,” as per its Sept. 30 financials. 

The recent pullback in the stock is an attractive investment opportunity, according to Cantor Fitzgerald. 

Aurora Price Action

The stock was trading 2.12% higher at $1.68 at the time of publication Monday. 

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Photo courtesy of Aurora Cannabis.