On November 18th, Bank of America terminated coverage on Tilray Inc (TSX: TLRY) and Aurora Cannabis (TSX: ACB), citing a reallocation of resources while slashing their price targets on Canopy and Cronos. This comes after the licensed producers showed another weak quarter.
For the Tilray termination note, they add some colour going forward after the fiscal first quarter, saying that COVID sales headwinds are expected to persist. They believe this is the case since COVID-19 had impacted store sales, with Ontario opening their stores up again at full capacity just recently. They write, “COVID concerns are impacting the consumer behavior and weighing on traffic” and believe that the provinces are just starting to replenish their inventories.
Lastly, on Tilray, Bank of America believes Tilray will see the rest of the merger synergies into the second half of the company fiscal year. They note that Tilray realized $55 million of its targeted $80 million in merger synergies.
BofA also comments that Tilray saw $8 million in cash savings for the quarter, all in selling, general and administrative costs. They believe that about 30% of all synergies will flow through the cost of goods sold and write, “we assume a benefit starting in F2H now that the company has turned through legacy-Tilray inventory.”
Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
