Roth/MKM has lowered the price target for Tilray (NASDAQ: NASDAQ:TLRY), a global pioneer in cannabis research, cultivation, production, and distribution, to $1.75 from the previous target of $2.00. The firm has chosen to maintain a Neutral rating on the stock.
The adjustment follows Tilray's first-quarter earnings, which did not meet the market's expectations. The company reported revenue of $200 million, falling short of the consensus estimate of $218 million.
Additionally, the adjusted EBITDA for the quarter was $9.3 million, which was below the consensus of $13.6 million. This figure is the lowest since the first quarter of 2021, a period before Tilray executed accretive deals for HEXO (NASDAQ:HEXO), Redecan, Beer Brands, and realized cost synergies.
The analyst from Roth/MKM pointed out that despite a strong performance in the fourth quarter of 2024, Tilray has encountered core organic business pressures, notably from price compression in the Canadian market. These pressures have persisted despite the company refining its international businesses, which are poised for imminent growth.
In other recent news, Tilray Brands, Inc. reported mixed results for its first quarter of the fiscal year 2025. The company's revenue of $200.0 million fell short of Piper Sandler's $229.0 million projection, marking a roughly 13% sequential decline.
Despite the revenue miss, Tilray maintains its fiscal year 2025 sales forecast between $950 million and $1 billion, which includes contributions from mergers and acquisitions. The company's adjusted EBITDA for the quarter was $9.3 million, also below the expected $13.7 million.
Piper Sandler maintains a Neutral rating on Tilray, while Jefferies reaffirms a Buy rating. Both firms highlighted the company's mixed financial performance, with Jefferies noting Tilray's strategic focus on profitability despite deliberate sales misses. The beverage alcohol sector of Tilray saw significant growth of 132%, and the company's gross margin expanded by 207 basis points due to a better product mix and reduced costs.
InvestingPro Insights
To provide additional context to Tilray's current situation, let's look at some key financial metrics and insights from InvestingPro. Despite the challenges highlighted in the article, Tilray's revenue growth remains strong, with a 25.8% increase in the last twelve months as of Q4 2024. This aligns with the InvestingPro Tip that analysts anticipate sales growth in the current year.
However, profitability remains a concern. The company's operating income margin stands at -12.21%, supporting the InvestingPro Tip that Tilray has not been profitable over the last twelve months. This explains the negative P/E ratio of -7.04, which reflects the company's current losses.
On a more positive note, Tilray's price-to-book ratio of 0.41 suggests the stock might be undervalued relative to its book value. This could be of interest to value investors, especially considering the InvestingPro Tip that analysts predict the company will be profitable this year.
For those interested in a deeper analysis, InvestingPro offers 7 additional tips for Tilray, providing a more comprehensive view of the company's financial health and market position.
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