Aurora Cannabis still has upside, this expert says

Aurora Cannabis (Aurora Cannabis Stock Quote, Chart TSX:ACB) has released its latest quarterly report, the first to include results within Canada’s new recreational use market..

Released on Monday, Edmonton-based Aurora’s second quarter fiscal 2019 results for the period ended December 31 featured a consensus beats on revenue. Net revenue was $54.2 million, an 83 per cent year-over-year increase, while the company recorded a loss attributable to shareholders of $237.7 million, compared to a profit of $7.7 million a year prior.

“Aurora continues to execute strongly across all of its market segments, as demonstrated by the 83 per cent revenue growth over last quarter and the significant increase in confirmed production results,” CEO Terry Booth said in a press release. “Our brands continue to resonate extremely well in the consumer market, our patient numbers continue to increase steadily, and we have maintained our market leadership in Germany and other key international markets. With our Aurora Sky and MedReleaf Bradford facilities ramping up production as anticipated and our other licensed facilities operating at full capacity, we are reiterating our earlier guidance of achieving sustained EBITDA positive results from the second calendar quarter of this year (our fiscal Q4).”

On Tuesday, cannabis sector reporter for BNN Bloomberg David George-Cosh says that the takeaway from the quarter should be Aurora’s focus on expansion into international markets.

“It’s a bit of a mixed quarter for Aurora going forward, but what I really found interesting is that they were quick to highlight the fact that they operate now in 21 countries around the world,” says George-Cosh to BNN Bloomberg. “Here we have a cannabis company that’s really thinking globally. They’re focusing on the global medical marijuana market which they see to be very high-margin. They have first-mover advantage in a number of these countries, particularly in the European Union.”

Like many in the sector, Aurora’s share price has trended upwards during the first few weeks of 2019 — it’s now up 42.7 per cent year-to-date as of late day trading on Tuesday. George-Cosh says that compared to its Canadian peers like Canopy Growth and Cronos Group, Aurora has perhaps less flash to it, especially as both Canopy and Cronos have garnered investment from established entities, alcohol giant Constellation Brands in Canopy’s case and tobacco giant Altria Group in Cronos’ case.

“Canopy has done a very good job on the PR side of things,” says George-Cosh. “You see [CEO] Bruce Linton really promoting the company. Aurora looks like a company that keeps its head down and executes. They still doesn’t have that Fortune 500 dance partner in the CPG market, so there’s still potential upside for this company going forward.”