Tilray. Buy, Sell or Hold?

Roth Capital Markets analyst Bill Kirk said in a Jan. 16 report that Tilray Brands (Tilray Brands Stock Quote, Chart, News, Analysts, Financials NASDAQ:TLRY) is showing signs of improving operational momentum, supported by accelerating international sales and steadier performance in its core Canadian adult-use business, though near-term headwinds remain.

Kirk pointed to a reacceleration in international cannabis sales, up 36% y/y, alongside 6% y/y growth in Canadian adult-use revenue and a notable inflection at CC Pharma, which delivered 26% y/y growth with 50 bps of margin expansion.

“With these trends, Tilray looks poised to enter a period of stronger growth,” he said.

Despite the improving fundamentals, Kirk maintained a “Neutral” rating and lowered his price target to $10.00 from $20.00, citing ongoing uncertainty around U.S. legislative outcomes and regulatory risks tied to intoxicating hemp products.

Areas of pressure included sharply lower wholesale sales in the quarter, down 80% y/y, which Kirk expects to be redirected to international markets over time, and continued contraction in the beverage segment, which he believes will persist and faces added regulatory risk from a potential intoxicating hemp ban in late 2026.

Tilray reported fiscal Q2/26 net sales of $217.5-million, ahead of consensus of $210.9-million, with Adjusted EBITDA of $8.4-million, also above expectations. Gross margin came in at 26.4%, down 260 bps y/y and 100 bps q/q, reflecting continued pressure in beverages. The company reaffirmed its fiscal 2026 Adjusted EBITDA guidance range of $62-million to $72-million, compared with roughly $55-million in fiscal 2025.

Segmentally, cannabis revenue rose 4.7% q/q, with international sales increasing to $20.2-million from $13.4-million in the prior quarter and $14.9-million a year earlier, while Canadian adult-use sales improved to $62.4-million from $59.1-million last year. Cannabis gross margin improved sequentially to 38.7%, though it remained below late fiscal 2025 levels. Beverage revenue declined to $50.1-million, down 20.6% y/y, with gross margin falling to 31.4% amid ongoing SKU rationalization and a difficult craft beer environment. Distribution revenue stood out, rising 26% y/y to $85.3-million, with modest margin expansion.

Kirk noted that Tilray has become net cash positive, compared with $434-million of net debt in fiscal Q2/24, aided in part by equity issuance. With its ATM program completed and the balance sheet stabilized, he said further dilution is unlikely absent M&A activity.

He said Tilray should generate about $63.2-million in Adjusted EBITDA on revenue of $870.8-million in fiscal 2026, improving to roughly $87.5-million in Adjusted EBITDA on revenue of $926.5-million in fiscal 2027.

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