Aurora Cannabis (NYSE:ACB) is one of the most popular marijuana stocks on the market today, but not everyone is a fan.

Stifel analyst W. Andrew Carter recently lowered his rating on Aurora Cannabis' stock to "sell" from "hold." He also reduced his target price to CA$5 ($3.77) from CA$7 ($5.28). 

A keyboard button labeled sell

Image source: Getty Images.

Carter argues that Aurora's fourth-quarter report indicates that the marijuana company is nowhere close to achieving profitability. Aurora generated a net loss of CA$297.9 million in its most recent quarter. Even its adjusted earnings, before interest, taxes, depreciation, and amortization (EBITDA) -- which excludes share-based compensation and a host of other charges and expenses -- came in negative, at a loss of CA$11.7 million. 

Although Carter acknowledged that Canada's impending legalization of cannabis derivatives -- such as edibles, infused beverages, and topicals -- should provide a catalyst for revenue growth, overall recreational marijuana sales are likely to be "more muted" than expected. In turn, Carter slashed his forecast for Aurora's 2020 full-year revenue to CA$485 million from CA$600 million. Carter also now expects Aurora to generate a larger EBITDA loss of CA$89 million, compared with his prior projection of CA$32 million. 

Moreover, Carter predicts that Aurora will need to raise "significant" capital before the end of Q1 2020. Unlike rivals Canopy Growth (NYSE: CGC), which received $4 billion in investments from beer giant Constellation Brands (NYSE: STZ) (NYSE: STZ-B), and Cronos Group (NASDAQ: CRON), which received a $1.8 billion investment from tobacco titan Altria (NYSE: MO), Aurora has yet to sell a significant stake in itself to a larger partner. As a result, Aurora has relatively low cash reserves, which Carter believes will make it challenging for it to invest in the potentially massive U.S. marijuana market.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.