On Tuesday, Jefferies analyst Owen Bennett reaffirmed a Buy rating on Tilray (NASDAQ:TLRY) shares, maintaining the $2.50 price target. This target represents significant upside potential from the current price of $1.17, with the stock trading near its 52-week low after an 18.6% decline in the past week. Bennett's stance comes even as Tilray's recent sales figures fell short of expectations.
According to InvestingPro analysis, Tilray's stock currently appears undervalued based on their proprietary Fair Value model, with 8 additional real-time insights available for subscribers. The analyst highlighted that the sales miss was a strategic choice aimed at enhancing profitability, which he believes is a beneficial approach for the long term.
This aligns with InvestingPro data showing revenue growth of 18.4% in the last twelve months and analysts expecting continued sales growth this year. Bennett anticipates that future financial periods will serve as incremental steps toward a more significant narrative for the company.
Tilray's performance in the beer market was also below projections, which Bennett attributed to the company's ongoing efforts to streamline its product portfolio and transition its distribution model. Despite these challenges, the analyst underscored Tilray's dominant position in the global cannabis industry and its strong balance sheet. Additionally, Bennett pointed out that Tilray's leading stake in the U.S. craft beer market offers a stable source of cash flow.
Bennett's commentary indicates that these factors collectively contribute to a positive long-term outlook for Tilray. He emphasized the company's strategic moves, suggesting that they should be viewed as building blocks towards a broader and more impactful market presence.
The reaffirmation of the Buy rating and price target reflects confidence in Tilray's strategic direction and its potential for growth. Bennett's analysis suggests that while near-term sales figures may have disappointed, the focus on profitability and market positioning is expected to yield benefits in the future.
Tilray's commitment to maintaining its leadership in the cannabis sector, coupled with efforts to optimize its beer business, are central to the analyst's optimistic perspective. The company maintains a healthy financial position with a current ratio of 2.54, indicating strong liquidity, and operates with a moderate debt level.
The Buy rating and $2.50 price target from Jefferies signal a vote of confidence in Tilray's long-term strategy and its ability to navigate the current market dynamics.For a comprehensive analysis of Tilray's financial health, valuation metrics, and growth prospects, investors can access the detailed Pro Research Report available exclusively on InvestingPro.
In other recent news, Tilray Brands, Inc. reported its second-quarter financial results, revealing a revenue of $211 million. This figure aligns with TD Cowen's projection but falls short of the broader market consensus of $218 million. The shortfall was due, in part, to a 16% decrease in Canadian adult-use cannabis sales. Furthermore, the company's adjusted EBITDA of $9 million also did not meet the consensus estimate of $11.2 million.
Despite these results, Tilray's management anticipates a rebound in the third quarter, with a strategic shift to refocus on previously de-prioritized categories. TD Cowen's analyst, Vivien Azer, maintained the forecast for Tilray's fiscal year 2025 sales at $900 million but revised the FY25 EBITDA estimate downward to $62 million. Azer has also adjusted the price target on Tilray shares, reducing it from $2.00 to $1.50, while keeping a Buy rating on the stock.
In addition to these developments, Tilray reported growth across all four of its business segments compared to the prior year quarter and reaffirmed its guidance for net revenue between $950 million and $1 billion for fiscal year 2025. The company also highlighted its $25 million synergy plan for the Tilray beverage business, known as "Project 420", of which it has already achieved $17 million.
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