Auxly Cannabis wins “Buy” rating from this analyst

Haywood Capital Markets analyst Neal Gilmer initiated coverage of Auxly Cannabis Group (Auxly Cannabis Group Stock Quote, Chart, News, Analysts, Financials TSX:XLY) with a “Buy” rating and $0.25 target in a Dec. 11 report, saying the past year has been “transformative” for the producer as it delivered strong revenue growth and materially strengthened its balance sheet, removing the going-concern uncertainty that had weighed on investor sentiment.

Toronto-based Auxly (best known for its Back Forty brand) operates large-scale cultivation in Leamington, Ont., and a processing and product-development site in Charlottetown, PEI. The portfolio spans major cannabis categories, and the company’s execution in product innovation and quality has lifted it into the country’s top tier of licensed producers.

Gilmer highlighted that Auxly achieved the #3 market share nationally in Q3 2025, with a 6.1% share, and that Back Forty exited the quarter as the #1 cannabis brand in Canada. Auxly also held the #1 non-infused pre-roll brand, the #1 all-in-one vape brand, the #1 flower brand, and ranked as the #3 overall LP.

He emphasized that balance sheet repair has been decisive. The extension of the BMO credit facility and settlement of the Imperial Debenture allowed Auxly to report positive working capital for the first time in 10 quarters.

“In our view, these transactions present a materially stronger balance sheet for investors … and represent an important milestone in management’s ability to execute on strategy,” he said.

Auxly’s financial metrics have also strengthened. Revenue rose 21% in 2024, and Gilmer expects 24.4% growth in 2025, making Auxly “one of the stand-outs in the Canadian cannabis sector.” Gross margin improved to 55.5% in Q3 2025 (from 36.1% in Q1 2024), while SG&A growth remains below the pace of revenue growth, allowing EBITDA margins to expand sharply to 30.8% from 8.9% over the same period.

Gilmer expects Auxly to continue outpacing broader Canadian market growth. Strong gross margins and disciplined cost management should sustain “impressive EBITDA margins and annual cash generation.”

He recommends accumulation at current share levels, arguing that Auxly “has demonstrated the quality of its brands” and that, following debt-reduction progress, the company is positioned to “capture investors’ attention.”

Gilmer forecasts $41.7-million in Adjusted EBITDA on $152.2-million in revenue for fiscal 2025, improving to $45.5-million EBITDA on $163.9-million in revenue in fiscal 2026.

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