Earlier this week, Tilray, Inc. (TLRY) (TLRY.TO) completed the merger with Aphria and created the world’s largest cannabis company (from a revenue standpoint).
We have been closely following the companies following the merger announcement in late 2020. After the deal was reported, both companies started to trend higher. Since then, the trend has turned to the downside and Tilray and Aphria came well off its 2021 highs.
Yesterday, two broker-dealers issued Tilray new price targets. These are the first price target changes since the transaction was completed and we have highlighted them below:
- Stifel lowered its price target to $16 from $21
- CIBC raised its price target to $25 (CAD) from $23 (CAD)
- Jefferies changed its rating to Buy from Sell and raised the price target to $23 from $4.77
At current levels (as of the close on May 6th), Tilray was trading barely below Stifel’s target. CIBC’s price target on Tilray implies that they see more upside potential than Stifel and we will monitor how other broker-dealers value the combined company.
For the second time this week, Tilray has filed a series of Form 4s and reported to have granted a significant amount of stock options and restricted stock units (RSUs) to the following:
- Former Tilray CEO Brendan Kennedy was granted almost 150,000 RSUs (owns more than 10 million shares of Tilray)
- Tilray CFO Carl Merton was granted more than 158,000 RSUs and 45,000 common shares from an employee stock option purchase (ESOP) agreement
- Tilray Head of Canada James Meiers was granted more than 125,000 RSUs and 249,000 common shares from an employee stock option purchase (ESOP) agreement
We believe the amount of shares that are being granted to employees and executives of Tilray via RSUs and an ESOP agreement are completely in-line with other cannabis and non-cannabis companies. Through these avenues, Tilray has employers and executives fully vested in the success of the business and we find this to be an important aspect of the story. The compensation that was issued to him was from his former agreement with Aphria. Since Tilray is now the controlling entity, the compensation was converted to Tilray shares.
Going forward, we will monitor how broker-dealers responds to Tilray from a rating and a price target standpoint. If you are interested in learning more about Tilray, please send an email to email@example.com with the subject “Tilray” to be added to our distribution list.
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