Could Aurora Cannabis’ share price go up in smoke after earnings?

For Aurora Cannabis’ share price, 2020 has gone from bad to worse.

Sept. 22, 2020

This article was originally published on OptoUnderstand What Really Moves Markets.

While Aurora Cannabis’ share price hit an intraday high of $27.84 on 16 January, it closed the day at $25.80, marking a 4.4% fall from its opening price at the start of the year.

This year’s high is a far cry from its best-ever day on the markets, when Aurora Cannabis’ share price hit an all-time high of $144.48 before closing at $143.27 on 23 January 2018.

Aurora Cannabis’ share price has been on a downward trajectory since March 2019. On its worst day of trading so far this year, Aurora Cannabis’ share price fell to an intraday low of $5.60 on 13 May before closing at $5.80 — its lowest value in four years. The decline marked a year-to-date fall of 75.9%.

However, Aurora Cannabis’ share price was quick to recover in the following days and reached a post-slump peak of $19.68 during intraday trading on 18 May, before closing at $17.10. Despite the surge, this value still marked a loss of 34% year-to-date.

Since then, Aurora Cannabis’ share price has declined by 74.8% through 18 September’s close.

Will the company’s earnings report, due on 22 September, see Aurora Cannabis’ share price continue to fall?

How has Aurora Cannabis been performing? 

When Aurora Cannabis released its third-quarter earnings on 15 May, it reported a loss of $1.37 per share, representing a difference of 37% compared to last year’s $1.89 loss per share.

It missed the Zacks consensus estimate of a loss of $0.53. Over the past four consecutive quarters, Aurora has only surpassed EPS estimates twice.

For the quarter ended in March, Aurora Cannabis posted revenue of CA$75.5m, which surpassed the Zacks consensus estimate of $46.9m. On the day of its earnings report, Aurora Cannabis’ share price jumped up 68.6% to close at $11.20.

The results showed no material disruptions caused by the coronavirus pandemic. Michael Singer, interim CEO, expects the impact of COVID-19 to have a greater effect on the fourth quarter.

Looking ahead to its upcoming earnings release, analysts have a more positive outlook for Aurora Cannabis’ earnings, with the bottom line pegged at a loss of $0.27 per share, according to Zacks Equity Research. However, revenue is expected to reach $54.6m, which would represent a decline of 36% from the year-ago reported figure.

For the full year, Aurora Cannabis is expected to make sales of $207.21m, while total losses per share for the fiscal year 2020 are forecast to reach $11.55.

What’s the outlook? 

“Aurora Cannabis continues to dilute its shareholders into oblivion by selling stock to raise cash, and slightly over half of its total assets are classified as goodwill — that is, it overpaid for all of its acquisitions. I’m not entirely sure what Robinhood investors see in this stock,” Sean Williams wrote in The Motley Fool.

Aurora Cannabis has a consensus Hold rating from Zacks Equity Research.

Among 19 analysts polled by CNN Money, the consensus rating is also to Hold the stock. This rating is held by a majority of 13 analysts, with the remaining six evenly split between giving the stock Buy and Sell ratings.

The median 12-month price target among 17 analysts polled by CNN Money is $11.37, with a high estimate of $18 and a low of $5.29. The median estimate represents a 74.1% increase from Aurora Cannabis’ share price of $6.53 as of 18 September’s close.

The Essential Stock Market Digest: Join 30,000+ Opto subscribers getting market-moving news direct to their inbox, 4 x a week.

MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in companies mentioned above. Read our full disclosure policy here.

Past performance is not a reliable indicator of future results.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. View our full disclaimer, here