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Aurora Cannabis
shares (ACB) has already jumped by more than 81% since the beginning of the year, but recent management meetings Vivien Azer from Cowen & Co. confident that he can continue to go higher.
The story back. Cannabis stocks are volatile, as well as Aurora, Alberta, but the good news outweighs 2019. The company's acquisition of Whistler Medical Marijuana sparked applause in January, as did profits in February. Aurora is riding a wave of enthusiasm on Wall Street as investors and other consumer goods companies rush to market themselves in the legal marijuana market. The legalization path may be longer and more sinuous in the United States than in Canada, but analysts are optimistic about Aurora's prospects. Last Wednesday, Azer named Aurora as his first choice in the Cannabis space. The title jumped to double digits that day, then rose 14% until Thursday's close.
What's up. Much of Aurora's recent rally comes from news earlier this week that Nelson Peltz joins the company as strategic advisor. As Barron's Peltz will work with Aurora to "explore potential partnerships that would be the optimal strategic fit for successful entry into each of Aurora's market segments" and advise on its global expansion.
Azer has spoken with Cam Battley, CEO of Aurora, as a result of this news and wrote that "Peltz should help ACB to open many doors as it develops its next stage of growth." Battley told him that the billionaire had advised the company for months informally, and Azer "does not see this as an activist changing the existing business model, but rather helping to accelerate performance. Given the large number of Rolodex contacts in Peltz … Aurora thinks they have an ally who will be able to provide advice on strategic partnerships, including partner selection, timing and structure. "
Look to the front. Before the news, Azer was optimistic for Aurora, calling not only his number one choice in cannabis, but also his third favorite idea in all his reporting. Still, she thinks the alliance will bring even more fruit. She reiterated an Outperform rating and a $ 14 price target for Canadian stocks.
She notes that Aurora has "adopted a more patient approach to partnership selection, aided by Peltz's lawyer," and she expects the company to establish "at least one partnership". in 2019 ", which may or may not be a capital investment similar to that of the company.
Altria Group
(MO) /
Cronos Group
(CRON), or the transaction between
Constellation Brands
(STZ) and
Cover growth
(GSC).
Azer also believes that the company and Peltz share a strategy of not offering stocks too early in their growth; this reflects a confidence in the growth trajectory and should result in a higher valuation. She also believes that Peltz's compensation structure – its options on 20 million shares is acquired over four years, with various incentives – is a good sign and that this arrangement is "win-win for both parties".
Aurora US stocks are down 0.8% to $ 8.92 this morning.
Write to Teresa Rivas at [email protected]
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