Is Auxly Cannabis a buy right now?

In a March 27 report, Haywood analyst Neal Gilmer reiterated his “Buy” rating and $0.25 target price on Auxly Cannabis Group (Auxly Cannabis Group Stock Quote, Chart, News, Analysts, Financials TSX:XLY), saying the company’s brand strength and improved balance sheet position it to attract greater investor attention.

Gilmer said Auxly has demonstrated the quality of its brands by capturing the third-largest market share in the Canadian cannabis market, and argued that debt reduction transactions completed last year have left the company better positioned going forward. He made the comments after Auxly reported fourth-quarter fiscal 2025 results that were broadly in line with his revenue forecast but ahead on profitability.

Auxly reported fourth-quarter revenue of $40.1-million, up 15.8% year over year and 0.5% sequentially, compared with Gilmer’s estimate of $40.9-million. The company said the increase reflected higher volume and pricing across dried flower, pre-roll and vape products. Gross margin came in at 55.5%, well above Gilmer’s 50.0% estimate, while Adjusted EBITDA reached $12.5-million, or a 31.3% margin, topping his forecast of $10.4-million, or 25.5%.

Gilmer also noted that Auxly generated $10.3-million in free cash flow during the quarter and $11.9-million in operating cash flow before working capital changes. The company ended the period with $32.7-million in cash and restricted cash and $46.3-million in debt.

Beyond the quarter, Gilmer highlighted Auxly’s move to become the DIP lender and stalking horse bidder for the assets of Ayurcann following quarter-end. He said management views the potential transaction as conservative relative to Auxly’s cash balance and expected free cash flow, while noting Ayurcann’s vape and pre-roll listings and brands would complement Auxly’s existing portfolio.

Gilmer also pointed to international expansion as a longer-term opportunity. While management continues to see supportive conditions in the Canadian cannabis market, he said the company is now evaluating export opportunities and plans to invest in international export capabilities in 2026 to position itself for future growth.

Following a review of the results and discussions with management, Gilmer said he made only modest changes to his 2026 estimates and introduced 2027 forecasts calling for 6% revenue growth and slightly improved EBITDA margins.

He said Auxly should generate $46.4-million in Adjusted EBITDA on revenue of $162.6-million in fiscal 2026, improving to $49.9-million in Adjusted EBITDA on revenue of $172.4-million in fiscal 2027.

Gilmer said he continues to value the shares at 9.0x projected 2027 EBITDA, discounted by 15%, compared with a previous 10% discount.

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