Should you sell your Tilray stock?
Haywood Securities analyst Neal Gilmer says Tilray Brands’ (Tilray Brands Stock Quote, Chart, News, Analysts, Financials TSX:TLRY) fiscal Q1 results missed expectations, with the shortfall mainly in cannabis.
Gilmer maintained his “Hold” rating and $4.00 target on Tilray in an Oct. 8 update.
Tilray reported fiscal Q1 2027 revenue of $257.1-million and Adjusted EBITDA of $9.2-million, below Gilmer’s estimates of $269.3-million and $12.1-million, respectively. Consensus was $266.8-million of revenue and $11.1-million of Adjusted EBITDA.
Revenue was up 22.7% year-over-year but down 8.7% sequentially.
Gilmer noted that Tilray’s Canadian cannabis market share declined during the quarter, while international cannabis sales fell sharply from the prior quarter. Management attributed about $8.8-million of the sequential decline to price compression.
Cannabis revenue fell 13.0% year-over-year to $56.1-million. International cannabis revenue rose 21% year-over-year to $16.2-million, while Canadian adult-use cannabis sales fell 16%.
Gilmer said management expects Canadian adult-use growth to resume later in fiscal 2027 as Tilray introduces new cultivars and products.
“We are expecting Canadian adult-use cannabis to be weak in the near-term with growth resuming later in fiscal 2027 as new products enter the market,” Gilmer said.
Tilray’s beverage alcohol revenue rose 82.1% year-over-year, driven by the inclusion of BrewDog. Segment adjusted gross margin improved to 41.4% from 38.3%.
Company-wide adjusted gross margin was 30.1%, above Gilmer’s 28.4% estimate and up from 27.4% a year earlier.
Tilray used $16.5-million of cash in operations, partly because of working capital changes. The company ended the quarter with $221.4-million of cash, restricted cash and marketable securities, and $201.4-million of debt.
Tilray reiterated fiscal 2027 guidance for Adjusted EBITDA of $68-million to $75-million.
Gilmer wrote that he continues to recognize Tilray’s diversified business, including cannabis, beverage alcohol and pharmaceutical distribution, but remains cautious about its ability to deliver consistent organic growth.
“We maintain our Hold rating as we await clearer evidence of accelerating organic revenue growth and improving cash flow generation,” he said.
Gilmer expects Tilray to generate Adjusted EBITDA of $67.3-million on revenue of $1.10-billion in fiscal 2027, improving to Adjusted EBITDA of $74.3-million on revenue of $1.16-billion in fiscal 2028.
-30-
Nick Waddell
Founder of Cantech Letter
Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
