Tilray: Ladenburg Thalmann Remains Neutral Following Q3 Results

Monday night Tilray Inc (NASDAQ: TLRY) reported its third quarter results. Revenue for the quarter was $51.4 million, flat quarter over quarter, while the company posted a net loss of $2.3 million. Tilray also reported that total kilograms sold decreased by over 50% year over year from 10,848 kilograms to 5,107, while the average price per gram rose in the same time period from C$4.32 to C$8.15.

As of this morning, Stifel was the only analyst to change their rating on Tilray, whom cut their rating from sell to hold while reducing their price target from $6.00 to $4.75.

Glenn Mattson, Ladenburg Thalmann’s cannabis analyst, who has a neutral rating and no price target on Tilray, headlines “Profitability Improving, Waiting on an Inflection Point for Growth; Neutral.”

Mattson makes note that revenue was in line with his estimate and said, “adult use did well up 26% year on year while Canadian medical saw steep declines.” He cites that this decline is mainly due to Tilray moving away from bulk revenue, which Tilray would report as medical revenue. Gross margin excluding inventory grew 7% this quarter to 33%, above Mattson’s 28% estimate.

Onto international revenue, which he comments, “was slowed by short-term issues.” Tilray’s international medical revenue came in flat quarter over quarter primarily due to temporary issues related to import controls. Mattson believes that Tilray will regain the lost revenue in the fourth quarter but adds, “though it is uncertain if it will be offset by Covid related shutdowns that further slow growth.”

Mattson says Tilray’s U.S strategy is a patient one. Tilray acquired Manitoba Harvest, a hemp foods company, which he says, “the category did well in 3Q, growing 27% year on year, though management was cautious about the near-term growth.” He then says that they are uncertain at how quickly and effectively the company can turn this hemp asset into a weed producing competitor in the U.S.

He adds that Tilray’s adult recreational segment performed well, up 13% year over year. The reason for the average price per gram growing year over year is because Tilray “has grown less interested in the value category as the market continues to get increasingly price competitive,” Mattson says.

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.

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