Aurora Cannabis and Grow Group Extend Partnership

Aurora Cannabis (ACB) announced Thursday its subsidiary Aurora Germany GmbH had renewed its long-standing agreement with Grow Group PLC by signing a two-year market access services agreement for the U.K.

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Aurora Cannabis is a Canadian company specializing in producing and distributing cannabis for medical and recreational use. On the other hand, Grow Group is a U.K.-based biopharmaceutical company focused on improving access to cannabis-based medicines. The Canadian cannabis giant initially partnered with Grow Group in August 2019. Since then, the two companies have dominated the fast-growing U.K. medical cannabis market.

Aurora Cannabis CEO Miguel Martin said, “We are delighted to extend our existing strategic relationship with Grow. We have worked successfully with Grow and their joint venture partner, IPS, since entering the U.K. market. Renewing this agreement will help to broaden access for patients by leveraging Grow’s work educating physicians and creating awareness of medical cannabis options. Aurora is committed to providing access to legally produced high-quality pharmaceutical-grade medical cannabis to address the needs of the growing European medical cannabis market, made possible with our EU GMP facility, Aurora Nordic.”

Pierre van Weperen, Managing Director of Grow Group PLC, U.K. & Ireland, indicated that access to medical cannabis in the U.K. and meeting patient needs are at the center of Grow Group’s strategy.

He added, “Quality of products, broad range of offerings, and a strong supply chain is critical to serving the U.K.’s fast-growing patient population. Partnering with companies like Aurora will continue to enable us to offer a portfolio of high-quality flowers and extracts to doctors and the patients who will benefit from them. Every day, these products make a difference for patients and we look forward to advancing market access together with Aurora.”

Aurora recently announced its intention to transfer to the Nasdaq Global Select Market from the New York Stock Exchange on May 24. (See Aurora Cannabis stock analysis on TipRanks)

After Aurora released its Q3 results, Cowen & Co. analyst Vivien Azer maintained a Hold rating on the stock but lowered its price target to C$8.50 (from C$16.00), for 3% downside potential.

Azer stated, “Consistent with peers, ACB saw a soft 3Q21 print, driven by weakness in the Canadian adult-use market while its medical cannabis segments were more resilient. As the medical market today remains highly fragmented (top 5 LPs represent 40% share), and is a clear strength for ACB, we look for revenue growth to come primarily from the company’s high margin medical segment. Maintain Market Perform.”

The rest of the Street is quite pessimistic on ACB with a Moderate Sell consensus rating based on 4 Holds and 8 Sells. The average analyst price target of C$8.54 implies 2.8% downside potential from current levels. Shares have fallen approximately 14% in the past month.