Tilray (NASDAQ:TLRY) investors have endured a miserable time in recent years with any momentary upward momentum quickly put out by ongoing bearish sentiment. To wit, the stock has shed 94% over the past five years, with 37% of those losses accrued during the past 12 months.
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For those hoping the Canadian cannabis company’s latest set of quarterly results could offer a turnaround, reality has bitten hard once again. The stock has shed another 15% after Tilray dialed in another disappointing readout.
In the fiscal second quarter (November quarter), the gains were primarily fueled by the beverage segment, which showed 36% year-over-year growth and contributed $63 million. However, the cannabis and distribution segments lagged, generating $66 million and $68 million, respectively, reflecting a y/y decline of about 2% and modest growth of around 2%. The end result was a y/y revenue increase of ~9%, with the total landing at $211 million, missing Street expectations by 2%. Meanwhile, adj. EBITDA for the quarter dropped by ~10% vs. the year-ago period, reaching $9 million and falling short of the Street’s $11.6 million forecast.
While those metrics were not what investors were hoping for, Zuanic and Associates analyst Pablo Zuanic is encouraged by several positive developments. These include the 25% y/y growth in international markets and an increased emphasis on the patient-focused segment, a profit-margin-oriented strategy for the Canadian recreational market, and the successful ongoing integration of various alcohol beverage assets. Additionally, Zuanic likes the entry into the U.S. HDD9 beverage market, where the company is “uniquely positioned” due to its broad distributor network, unlike peers that remain mainly concentrated on the online direct-to-consumer channel.
Furthermore, management is still confident it can achieve its FY25 sales guide of $950 million to $1 billion and believes the company is well-positioned to capitalize on potential regulatory changes in the U.S. under the incoming administration.
Still, Zuanic remains cautious. “We prefer to remain sidelined (though more constructive), but we are keeping a close eye on international (2Q25 was a positive quarter for that division), growth in drinks, US moves, and FCF trends,” he stated. “Our FY25 sales estimate remains below the guidance range, and we recognize this may continue to influence sentiment in the near term.”
All told, Zuanic assigns a Neutral rating for TLRY shares without having a specific price target in mind. (To view Zuanic’s track record, click here)
Overall, TLRY shares have picked up a Moderate Buy from the analyst consensus, based on 7 recent reviews that include 2 Buys and 5 Holds. The average target price stands at $1.68, implying ~42% upside potential from current levels. (See Tilray stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
