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Why Aurora Cannabis Stock Wilted Today

By Rich Smith – Sep 29, 2021 at 1:39PM

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Analysts warn that investors may be overlooking negatives in Aurora's Monday report.

What happened

One day after a somewhat better-than-expected earnings report sent Aurora Cannabis (ACB -6.61%) stock roaring higher, shares of the popular marijuana stock are relapsing today and are down 2.2% as of 11:10 a.m. EDT.

I blame Wall Street.

Wilted marijuana plants.

Image source: Getty Images.

So what

In its fiscal fourth-quarter 2021 earnings release that came out Monday night, Aurora Cannabis reported a better-than-expected Q4 loss and a much-reduced cash burn. The company said it saw a "clear pathway to adjusted EBITDA profitability" -- all factors that had investors feeling optimistic about the stock's future.  

Today, however, several Wall Street analysts stepped forward to inject a dose of reality into the discussion. Commenting on the results, investment bank Piper Sandler pointed out that Aurora Cannabis's 54.8 million Canadian dollars in Q4 revenues fell short of the consensus target of C$58.3 million, leading the analyst to lower sales estimates for the coming fiscal year 2022 from C$315 million to just C$280 million, and to cut its fiscal 2023 estimates from C$430 million to C$375 million, reports StreetInsider.com today.

The company's weak performance in recreational cannabis sales led both Canaccord Genuity and the Canadian Imperial Bank of Commerce (CIBC) to cut their price targets on Aurora Cannabis stock by 7%, to C$6.50.  

Meanwhile, Stifel Nicolaus, which said Aurora's results were actually "above our expectations," nevertheless reiterated its own "sell" rating on Aurora Cannabis stock.  

Now what

In short, Aurora Cannabis's fourth fiscal quarter 2021 was far from an unalloyed success -- and things could still get worse.

In one note today, according to TheFly.com, MKM Partners warned that the recreational cannabis business "continues to struggle," a fact Aurora itself admitted. And while Aurora emphasized its efforts to lean into medical marijuana sales as a way to improve margins and grow revenues despite recreational weakness, Cowen & Company warned today that Aurora's "outsized medical exposure" creates the risk of "lumpy" earnings quarter to quarter.

Result: Aurora missed in Q4 -- and it could miss again in the future.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Aurora Cannabis Stock Quote
Aurora Cannabis
ACB
$1.13 (-6.61%) $0.08

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