Tilray Brands is doing just fine, this analyst says

Roth Capital Partners analyst Bill Kirk maintained his “Buy” rating and US$9.00 target on Tilray Brands (Tilray Stock Quote, Chart, News, Analysts, Financials Nasdaq:TLRY), arguing that concerns about share dilution and stagnant profitability are overshadowing an expected recovery in earnings.

In an Oct. 23 update, Kirk said Tilray’s BrewDog acquisition and upcoming Carlsberg licensing agreement should support renewed Adjusted EBITDA growth, while the need for additional equity financing diminishes. He said recent share issuance was primarily used to fund the BrewDog acquisition and related working capital requirements, rather than ongoing operating losses.

Tilray acquired selected BrewDog assets through a series of transactions totalling US$54-million. BrewDog generated US$55.9-million in fiscal Q1 2027 revenue, up from US$51.1-million in the previous quarter.

Kirk said BrewDog had historically operated at substantial losses, with operating expenses representing approximately 50% of revenue. However, Tilray acquired roughly two-thirds of its revenue while leaving behind its least productive assets. He said the acquired business was profitable and self-funding in Q1, apart from approximately US$50-million in receivables and inventory investment.

Kirk believes Tilray can improve BrewDog’s profitability through cost reductions, expanded distribution and opportunities to introduce its U.S. beverage brands into international markets. Based on comparisons with industry peers, he estimates BrewDog could generate at least US$10-million in annual operating earnings, with potential upside toward US$30-million.

Kirk also highlighted Tilray’s five-year licensing agreement with Carlsberg, which begins Jan. 1, 2027. The agreement gives Tilray responsibility for producing, marketing, selling and distributing Carlsberg, Carlsberg Elephant, 1664 and Kronenbourg 1664 Blanc in the United States. Kirk estimates the agreement could generate approximately US$20-million in annual revenue, based on existing U.S. sales of roughly one million cases.

“Importantly, Tilray has extra capacity for the Carlsberg cases, which should allow for nice incremental margin on fixed asset base,” Kirk said.

The analyst expects the combination of BrewDog’s improved operations and Carlsberg’s contribution to reverse recent earnings weakness.

“Between BrewDog contribution/initiatives and Carlsberg, we expect Tilray Beverages and consolidated profitability to immediately resume y/y growth,” he said.

Turning to cannabis, Kirk said Tilray’s international business continues to demonstrate underlying demand despite pricing pressure. International cannabis revenue declined sequentially to US$16.2-million from US$27.2-million, but increased approximately 20% year-over-year despite US$8.8-million in price compression. He expects international cannabis revenue and margins to improve in fiscal Q2 as pricing pressures ease and buyers place greater emphasis on product standards.

Kirk also addressed investor concerns about dilution after Tilray’s fully diluted share count doubled over three years without corresponding Adjusted EBITDA growth. During fiscal Q1, Tilray issued 4.6 million shares through its at-the-market equity program, raising US$22.9-million. Approximately US$70-million remains available under the program.

“With over $200mn in cash, we believe, absent new M&A opportunities, issuance will slow at the same time free cash flow generation will improve,” Kirk said.

He expects Tilray to generate Adjusted EBITDA of US$68.9-million on revenue of US$1.13-billion in fiscal 2027.

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