On the heels of President Biden historical announcement that he pardoned all federal convictions for marijuana possession, Cantor Fitzgerald’s Pablo Zuanic shared some insights Canadian cannabis giant Tilray Brandsinc TLRY TLRY.
On Friday, Tilray reported on its financial results for the first fiscal quarter ended August 31, 2022 with net revenue of $153.2 million compared to revenue of $168.02 million for the same period last year.
How many cannabis stocks Tilray’s rose after Biden’s surprise announcement, then flattened. The stock on Friday temporarily fell 11% after the high on Thursday.
The Analyst
zuanian remained neutral on the company’s stock and raised its 12-month price target to $4.50 from $4.15.
The thesis
Zuanic said his updated estimates are the result of the company’s estimates Friday 1Q23 Results. “Specifically, we would find that cannabis sales are 7% above consensus (CPG was below) due to a much better performing domestic Rec business. In terms of scale, B/S strength and infrastructure, management believes TLRY is well positioned to benefit as various markets legalize Rec-Cannabis (Germany, US) and/or expand medicinal products.”
Tilray recently initiated a political round table with German regulators on the legalization of adult-use cannabis, in which the German Drug Commissioner presented a plan for legalization and a draft law that is expected to be presented in the coming months.
“I expect Rec sales in Germany to start in early 2024E and see it serving that market well from its facilities in Portugal and Germany (management noted the latter being scaled up and for Rec sales can be adjusted)”, Zuanic said.
Regarding the US, “We recognize that cannabis stocks are currently being driven more by sentiment on US reform prospects (see stock performance yesterday afternoon) than actual fundamentals, but despite this morning’s profit-taking, we believe sector risks are on the upside. In this regard, TLRY should benefit…
