Tilray Analysts Bullish Following Earnings Pop

After a big post-earnings pop on Wednesday, Tilray Inc TLRY pulled back a bit on Thursday morning. However, analysts say there’s still more upside ahead of the Canadian cannabis giant.

The Numbers: Tilray reported fiscal fourth-quarter GAAP EPS of 18 cents, beating analyst estimates for an eight-cent loss. Revenue for the quarter was $142.2 million, slightly below analyst forecasts of $142.9 million. Revenue was up 25% from a year ago.

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Voices From The Street: On Thursday, Bank of America analyst Heather Balsky said Tilray management reassured investors with a confident tone on the company’s earnings call. The company is now targeting $4 billion in sales in 2024, assuming U.S. cannabis reform happens within the next 24 months. Management added that Tilray is “ideally positioned to compete in the U.S. market via CBD and THC beverages, as well as CBD edibles and other products.

“Tilray is a standout for its positive EBITDA and free cash flow, while most of its peers are still posting negative EBITDA and burning cash,” Balsky said.

Bank of America has a Buy rating and $21.50 price target for Tilray.

Cantor Fitzgerald analyst Pablo Zuanic said Wednesday that Tilray’s quarter was mixed and noisy, so much of Wednesday morning’s big move may be attributed to a short squeeze.

“In our view, cannabis sales trends were lackluster, but that can be explained by the COVID-related context (although management claimed the combined company has started to gain rec domestic share since April 2021),” Zuanic said.

Tilray said it has a long-term goal of increasing its Canadian recreational cannabis market share from 16% to 30%.

Cantor Fitzgerald has an Overweight rating and $19 price target for Tilray.

Benzinga’s Take: A closer look at Tilray’s quarterly numbers reveals a solid quarter, but nothing to get particularly excited about. If much of Wednesday’s big move higher was, in fact, a short squeeze, it’s likely the stock will give up some of those gains in the days ahead.

Tilray was trading at $16.18, up 1.06% at the time of this writing Thursday mid-morning.

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