When it comes to Tilray Brands (TLRY 1.74%) and recent price action, it's been all about the Canada-based cannabis company's U.S. legalization catalyst. Late last month, Tilray and other marijuana stocks surged on news of major regulatory progress.
However, as investors read the fine print and discovered this action was not the same as full legalization, this stock not only gave back gains but has fallen to prices under $6 per share, down from nearly $8 per share during the rally.
Yet while that may be discouraging for investors, one analyst remains bullish on the stock, calling for it to hit double-digit prices in the near future. Better yet, evaluating the analyst's rationale, a move to $10 or more per share may not necessary require major changes in U.S. federal law and regulations.
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Tilray Brands and its recent analyst upgrade
On April 2, following Tilray's latest quarterly earnings release, Roth Capital's William Kirk issued his latest take on the popular speculative growth stock. Although Kirk reiterated his prior price target of $10 per share, he raised his rating from "neutral" to "buy."
NASDAQ: TLRY
Key Data Points
Although the analyst did touch on the legalization catalyst in his research note, Kirk focused on two less-discussed ongoing developments at Tilray. First, he cited how the company is successfully penetrating international markets outside North America.
Last quarter, international cannabis sales grew 73% year over year. Second, the analyst noted that, thanks to Canadian cannabis companies' ability to send product overseas, the domestic market now faces reduced price pressure.
Why I'm still skeptical
Kirk's take notwithstanding, I remain skeptical that Tilray's strengths will be enough to send this stock to $10 per share. As reported in Tilray's latest earnings, the company's beverage unit is contending with declining revenue and gross profits.
Overall, the company continues to report a net loss. With the stock still in pullback mode and the next quarterly earnings release months away, waiting things out likely remains the better move.
