This analyst predicts Aurora Cannabis won't achieve positive cash flow from operations until late 2021.
In a note to clients late Thursday, Piper Sandler analyst Michael Lavery downgraded the cannabis producer to the equivalent of a sell and issued a $1 target price, down from $3. Lavery cited risks related to the balance sheet and weak European Union sales as significant factors.Read: Shorting cannabis stocks was a billion-dollar idea in 2019
Aurora could opt to take “more significant austerity measures” and consider “asset sales” to improve its cash position, Lavery wrote. “Aurora built its large capacity in Canada with expectations to export a significant amount internationally, but these sales have been very slow to materialize,” Lavery wrote. “German sales have been its highest priced and highest margin products, so the suspension of sales there hurts its revenue and margin mix.”There is good news in the form of the derivative cannabis market in Canada — vaporizers, edibles and other forms of cannabis other than flower and oil became legal in December.
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