Tilray Stock falls, but marijuana growers reported a sharp increase in revenue

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Canadian marijuana grower
Tilray

announced a larger loss than expected on Wall Street and the shares were trading Wednesday morning after advancing Tuesday in the aftermarket.

The company's higher than expected sales contributed to the rise in volatile equities. Here's what some analysts have said about Tilray's last quarter (symbol: TLRY) and its outlook.

BMO Capital Markets analyst Tamy Chen upgraded its rating from Tilray to Underperform's Market Perform. She wrote that the first quarter was in line with her expectations and that the change in rating was linked to the "significant downward trend of the stock so far", which is below her price target.

"In the future, we continue to believe that Tilray's production ramp to supply the Canadian market is somewhat behind some of the other major licensed producers," she wrote. "In addition, we have revised our estimates for 2019 and 2020 based on our revised outlook for a more gradual ramp-up of industrial production and value-added products in Canada."

Chen said his revenue forecast could represent a positive potential, namely an acceleration of sales of medical products in Europe.

Reference analyst Mike Hickey has a purchase rating with a price target of $ 200. He wrote Tuesday in a note to customers that Tilray had made better than expected sales.

Hickey said the company was planning to expand its production and manufacturing footprint to 1.3 million square feet. One of the main sales catalysts could be the upcoming legalization of edible products, extracts and topical cannabis products in Canada, scheduled for October. "The controls would include restrictions on product composition and ingredients, THC limits, and packaging and labeling requirements," he wrote.

Cowen analyst Vivien Azer stated that first-quarter revenues were "welcome relief", given the slow growth of the recreational cannabis market in Canada. She has a purchase rating with a price target of $ 150.

Azer noted that Tilray's gross margin improved by 3.2 percentage points compared to a 20% gross margin in the fourth quarter. She stated that gross profits were affected by the smaller increase in production in Canada and Portugal and by supply shortages in Canada.

"Based on the rest of the year, the company is still waiting for sequential improvements, but that will be more obvious" in the second half of 2019.

Global Partners Alliance analyst Aaron Gray maintained its neutral rating, but qualified this quarter as "best result". His income of $ 23 million was higher than his estimate of $ 20.7 million.

He noted that Tilray had sold 47% more product – 3,012 kg – compared to the previous quarter, but that the average price of $ 5.50 was down from $ 5.94 in the first quarter of 2018. "The company awards the lowest price per gram to the mix (minus sold extracts)," he wrote.

Gray expects the company's international growth to accelerate, as well as its plans to increase CBD sales.

"We believe that TLRY is well positioned to succeed in the growing cannabis sector with its leading position in terms of medical and clinical trials, as well as partnerships between the pharmaceutical, beverage and branding sectors," said he writes. "However, given the company's lower market share compared to other major Canadian sponsors, we believe that equities are properly valued at this level."

Tilray's shares faltered after the market opened on Wednesday. Stocks rose 0.7% early, but declined 3.3% to $ 47.09. the
S & P 500
the index was down 0.6%.