Tilray still a “HOLD”, Haywood says

Following the company’s third quarter results, Haywood Capital Markets analyst Neal Gilmer has maintained his “Hold” rating on Tilray (Tilray Stock Quote, Chart, News, Analysts, Financials TSX:TLRY).

On April 9, TLRY reported its Q3, 2024 results. The company posted Adjusted EBITDA of $10.2-million on Net Revenue of $188.3-million, a topline that was up 30 per cent over the same period a year prior.

“Over the past several years, our playbook of expanding our cannabis business to complementary markets, such as beverages and hemp-based consumer products, has positioned us well to navigate the current environment and to benefit from future growth opportunities, CEO Irwin D. Simon said. “Tilray Brands today represents the future of the global CPG [consumer packaged goods] industry, leading the convergence of cannabis, beverages and wellness. We have become the most dynamic and diversified cannabis lifestyle and consumer products company globally, as we lead and advance global cannabis, fuel consumer needs in wellness foods and snacks, and disrupt craft beverages. We are proud of our position as the No. 1 Canadian cannabis LP, the European market leader in medical cannabis, the leader in hemp foods, the fifth-largest craft brewer in the U.S., and are now aiming to become a top 12 beer and alcohol beverage company in the U.S.”

Gilmer says the quarter fell below expectations.

“Earlier today, Tilray released its FQ3 results for the period ended February 29th, 2024 that were below expectations,” he wrote. “Margins were impacted by the acquired beverage brands that should gradually improve once the Company is able to fully integrate those brands. Guidance was revised lower however management highlighted that Q4 should be seasonally strong and reflect a meaningful increase in both revenue and EBITDA.”

In a research update to clients April 9, the analyst maintained his “HOLD” rating and price target of $2.00 on TLRY, implying a return of negative 3% at the time of publication.

Gilmer thinks the company will post Adjusted EBITDA of $57.2-million on revenue of $782.3-million in fiscal 2024. He expects those numbers will improve to Adjusted EBITDA of $92.1-million on a topline of $879.3-million the following year.

“Tilray is the market share leader in the Canadian landscape, solidified by the Hexo acquisition,” the analyst concluded. “We are encouraged by the international opportunities, as well as expanding beverage segment in the United States. However, we remain cautious on the overall Canadian landscape and the lack of sustainable organic growth the Company has been able to achieve. We maintain our Hold rating as we await more evidence on accelerated near-term revenue growth drivers and improving cash flow generation.”