Tilray Inc. Receives Double Downgrades Following A Lackluster Earnings Report

Although Tilray Inc. (TLRY) reported strong fourth quarter financials and recorded a more than 20% increase in revenue when compared to the same period last year, broker-dealers have not responded as favorably as we anticipated.

Following the earnings report, Tilray was downgraded by two broker-dealers and we found this to be worth highlighting. Piper Sandler is one of the broker-dealers that downgraded Tilray and we found the price target increase on Tilray by Piper Sandler to be interesting.

While Benchmark simply cut its rating on Tilray from Buy to Hold, Piper Sandler also lowered its rating Buy to Hold and raised the price target to $26 from $15. We believe that Piper Sandler wanted its price target to be closer to the range that Tilray is trading in and are not overly surprised by the price target hike.

During the quarter, Tilray recorded a $3 million net loss on $56.6 million of revenue. For the entire year, the Canadian cannabis producer had a $10 million net loss on $210 million of revenue.

The primary reason for the increase in quarterly revenue is related to the international medical cannabis market as well as the Canadian recreational market. Tilray recognized a significant decline in the amount of revenue it has generated from hemp and attributed the drop to a shift to private label product with a large customer as well as the impact of COVID-related changes to consumer shopping patterns.

When compared to the prior quarter, Tilray recognized a 10% increase in revenue. The increase was primarily related to the leverage that it has to strategic international medical cannabis markets and the Canadian recreational market. We are bullish on the trend and expect the merger with Aphria (APHA.TO) (APHA) will make the combined company the largest cannabis company in the world.

Tilray is trading higher in the pre-market and this is an opportunity that we are closely following. If you are interested in learning more about Tilray and Aphria, please send an email to support@technical420.com with the subject “Tilray and Aphria” to be added to our distribution list.

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Michael Berger is Managing Partner of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.

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