An interesting readXLY is in the dumpster, and it should be there for a while longer yet. However, not to make any positive endorsements for their future, I came across this interesting read. I refer you to the third paragraph but read it all for context. Unfortunately they have an almost unsurmountable load of debt, which is extremely troubling.
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03:45 PM EDT, 07/19/2022 (MT Newswires) -- Cowen & Co. Analyst Vivien Azer said in a report to clients Tuesday that the 21% growth in cannabis industry sales observed in the second quarter of this year declined two percentage points compared to the same quarter a year earlier, noted BNN Bloomberg's David George-Cosh, who said that's seen as a slight improvement from slowdowns in prior quarters and "offers a potential sign of stabilization in the Canadian cannabis market despite the hyper-competitive state the industry operates in."
George-Cosh noted Canadian cannabis sales totalled $1.1 billion in the second quarter of the year, compared to $916 million a year earlier, according to Statistics Canada. It was also up eight per cent from $1.03 billion in the first quarter of 2022, the StatsCan data showed.
However, George-Cosh also cited Azer as noting the Canadian cannabis marketplace remains "highly competitive and fragmented" with the country's biggest producers Tilray Brands Inc., Canopy Growth Corp., and Hexo Corp. poised to report double-digit sales declines in the second quarter. They have lost a total of 25 percentage points of market share, according to analysis done by Cowen. Azer is cited as saying those trends contrast with market share gains for Organigram Holdings Inc. -- whose focus on the "value" segment has seen it jump ahead of Canopy for third place in the Canadian market -- as well as Auxly Cannabis Inc., which has focused mainly on Cannabis 2.0 products like vapes and extracts.
As a result of the broader industry trends, Azer trimmed her 12-month price target on Canopy's stock to $3.40 per share from $6.50 amid lower sales projections in Canada's recreational market, as well as softer-than-expected revenue from its Storz & Bickel vaporizer line and BioSteel sports beverage business. Azer also pushed her expectation for when Canopy will report positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) beyond fiscal 2025 -- a year later than what the company management has forecasted -- and cut her 2023 revenue expectations nearly 14% to $465 million.
Azer also trimmed her price target on Cronos Group Inc.'s stock to $4.30 from $4.50 per share, and raised her 2023 revenue estimate two per cent to $113 million amid steady international medical cannabis sales in Israel. She also raised her price target on Aurora Cannabis Inc. to $2 per share from $1.85 on a belief the company may benefit from higher margins on its medical cannabis business, which would offset ongoing declines in sales from its Canadian recreational business.
Lastly, Azer pointed out that early sales projections via industry data tracker Hifyre are "encouraging", as Tilray's market share declines may be short lived in June. Tilray's quarterly Canadian cannabis revenue is still expected to fall roughly 14%, and its German pharmaceutical distribution business may see flat growth, but that could be offset by ongoing cost savings and income derived from its strategic partnership with Hexo, Azer reportedly said.
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