It has been a headline-grabbing 2020 for Canadian cannabis producer Aurora (ACB). There has been a reverse stock split, an entrance into the U.S. CBD space via its Reliva acquisition and a much better-than-expected fiscal Q3 earnings report.
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All of which have steered Aurora further away from the edge over which it was previously hovering. As a result, despite a recent pullback, shares have popped 61% since the May split.
But is sentiment shifting again after another executive bid farewell?
On Tuesday, Aurora announced the departure of President Steve Dobler. The co-founder will say his goodbyes on June 30. Dobler’s exit follows those of COO Cam Battley, who left last year, and CEO and co-founder Terry Booth, who parted ways with the company during February’s restructuring.
Considering there have been other high profile exits this year, as more CPG-focused executives have taken over the reins from the entrepreneurs who formed the cannabis companies, Jefferies analyst Owen Bennett doesn’t see the development as much of a surprise. However, the analyst claims the disappointment among investors is based on the fact that Aurora did not disclose any succession plans.
Bennett said, “The continuation of executive departures is obviously not helpful for sentiment, but what we think is actually more damaging is the lack of new replacements. In our view, the market (retail investors especially) are hoping for the announcement of a new CEO to act as a positive catalyst. With the search for a new CEO beginning in February, there will be many who would have hoped that a release today may have been related to this rather than a further executive departure.”
Bennett, though, alleviates any concerns that Dobler’s exit might have a negative impact on the share price, should the co-founder decide to liquidate his position. Dobler holds “less than 0.5% of those outstanding, following significant share sales already back in March.”
No change, then, to Bennett’s Underperform rating and C$14.00 ($10.33) price target. The figure implies shares could decline by 21% in the next 12 months. (To watch Bennett’s track record, click here)
Overall, with 3 Buy ratings, 9 Holds and 2 Sells, the analyst consensus currently rates Aurora a Hold. In addition, there is downside in the cards, as the C$15.32 ($11.31) average price target indicates the stock could drop by 13.5% over the next year. (See AMD stock analysis on TipRanks)
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