Although the cannabis industry celebrated "4/20 Day" earlier this week, Tilray Brands' (TLRY 0.65%) shareholders haven't had much to get excited about. The marijuana stock remains more than 60% below its 52-week high. Tilray's shares are down more than 20% year to date.
However, Roth Capital analyst Bill Kirk likes Tilray's prospects. Earlier this month, Kirk upgraded the stock from "neutral" to "buy" with a 12-month price target of $10. At Tilray's current share price, that translates to a potential upside of over 40%. Should you believe this optimistic take?
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Why Roth predicts a rally for Tilray
Roth Capital's Kirk identified three primary reasons why he's bullish about Tilray. First was the stability of Tilray's Canadian business. The company continues to reign as the market leader in the Canadian cannabis industry. Its combined adult-use and medical cannabis net revenue rose 8% year over year in the quarter ending Feb. 28, 2026. Tilray maintains a No. 1 market share in Canada across key product categories, including flower, pre-rolls, beverages, chocolate edibles, and oils.
Kirk also pointed to Tilray's resurgence in international operations. The company generated the highest international cannabis net revenue in its history in the recent quarter. Net revenue skyrocketed 70% year over year to $24.1 million. International cannabis sales made up 37% of Tilray's total revenue.
Roth's bullish thesis for Tilray also factors in improvement in the company's beverages business. Net revenue from beverages jumped 22% year over year to $42.6 million in the latest quarter. Tilray chairman and CEO Irwin Simon said in the fiscal third-quarter update that the acquisition of U.K. craft beer brand BrewDog and the partnership with the Carlsberg Group, one of the world's largest brewers, are "accelerating the buildout of a scaled global beverage platform."
NASDAQ: TLRY
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Should you believe Tilray will soar 40% or more?
The three factors identified by Kirk are encouraging. However, I'm not convinced that investors should bet on Tilray's stock soaring 40% or more over the next 12 months.
Despite signs of improvement, Tilray still missed consensus revenue estimates in its latest quarter. Irwin acknowledged that "industry headwinds" persist that the company must navigate. The cannabis industry remains highly volatile.
Is it possible that Tilray can deliver a gain of 40% or more by this time next year? Sure. But it will probably require some good news for the cannabis industry as a whole. Investors wanting to play a potential cannabis comeback may be better off buying marijuana ETFs that provide more diversified exposure to the industry.
