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An employee holds a tray of Aurora Cannabis brand edibles in Ottawa.
David Kawai / Bloomberg
Cannabis Aurora
The stock looks set for another double-digit drop on Wednesday after the company announced a proposed overnight offer of $ 125 million of shares.
The stock (ticker: ACB) soared after the company reported earnings for the September quarter, extending the post-election rise to 136%. The vote provided a slew of bullish news about expanding cannabis sales in the U.S. But as analysts digested the report, stocks fell about 26% on Tuesday, reducing post-election gains to 75%.
The stock was still down 20% just before noon Wednesday at $ 6.61. The company has announced its intention to sell units – one common share and one half warrant to buy one share, exercisable at $ 9 – at a price of $ 7.50. The press release describing the plan did not specify an offer date.
The company said final terms will be determined at pricing time. He plans to use the proceeds, as appropriate, to fund growth opportunities, working capital and other general corporate purposes.
Stifel analyst W. Andrew Carter downgraded his ‘Sell Custody’ stock rating after the announcement, although he raised his price target to C $ 6.50 (4.98 US $). He said news of the offer confirmed his concerns about Aurora Cannabis’ cash position.
“We do not believe the company has demonstrated a sustainable right to win for new market opportunities, particularly in the United States, as the growing competitiveness of the Canadian market jeopardizes the company’s ability to achieve profitability while doing so. facing liquidity issues, ”Carter wrote. .
Cantor Fitzgerald analyst Pablo Zuanic lowered his price target to C $ 12 from C $ 13, but maintained a neutral rating.
He wrote that aside from the company’s outlook, the September quarter was disappointing on several fronts, including declining sales of Canadian recreational and medical cannabis as the company lost market share in the recreational sector. . He also said that margins and cash consumption have worsened.
Zuanic noted that the company’s new CEO, Miguel Martin, is starting to shift the company from a low-priced pot to more premium offerings, which Zuanic believes is starting to grow.
“Despite the volatility, we believe that the relative valuation [versus other pot companies] leaves little inconvenience, ”Zuanic wrote. “We certainly don’t blame management for taking advantage of the strong post-election crisis the action has endured.”
Write to Connor Smith at [email protected]
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