ACB Stock: Aurora Cannabis Stock Climbs Following Revenue Guidance

Aurora Cannabis Inc Big Gains Come After Revenue Guidance
iStock.com/wildpixel

Aurora Cannabis Stock on the Rise

The marijuana stock market staged a hardy recovery following a general fall across the market as Aurora Cannabis Inc (NYSE:ACB) issued revenue guidance that impressed investors and analysts.

ACB stock jumped nine percent after the company issued a strong revenue guidance for its fiscal fourth quarter.

Despite some analysts coming in with higher expectations than the company was able to deliver, ultimately it was a positive showing from the company and it followed a strong overall start to August for pot stocks. (Source: “Aurora Cannabis rallies and lifts cannabis stocks after offering revenue guidance,MarketWatch, August 7, 2019.)

Aurora is anticipating revenue (net of excise taxes) of somewhere between CA$100.0 million and CA$107.0 million, a huge leap from the CA$19.1 million in the previous year.

Advertisement

The current FactSet Research Systems Inc. (NYSE:FDS) consensus is for revenue of CA$112.0 million. Despite missing those expectations, I anticipate that Aurora Cannabis stock will continue to climb due to the massive growth that the company has experienced. Aurora’s previous quarter saw revenue of CA$65.1 million.

Net revenues are forecast to range from CA$90.0 million to CA$95.0 million, with growth expected across all business segments.

The company is also expected to report production available for sale of between 25,000 kg (55,116 lb) and 30,000 kg (66,139 lb), likely on the upper end of that limit.

The company also expects to report higher earnings before interest, tax, depreciation, and amortization (EBITDA), along with improvements in gross margins, kilograms of cannabis sold, and cash costs per gram produced.

The big jump in the price of ACB stock shows that growth is still on the horizon for the marijuana sector, even if sales are currently below expectations. Much of that is due to the regulatory burdens and other obstacles that governments have put in the way of the legal cannabis industry, something I’ve written about at length.

Still, all things considered, these are very strong numbers, and that’s reflected in Aurora Cannabis stock’s massive rise.

It’s also likely the last time we’ll see a huge increase in revenue year-over-year—or at least it won’t be as high as we saw this quarter.

We’re coming up to the first anniversary of when marijuana was legalized in Canada. That means, while we’re still going to see growth in pot stock prices, it’s unlikely we’ll be seeing massive jumps (think 500%+) year-to-year—that is, until other major markets begin legalizing pot.

On the flip side, we did see big gains from the last quarter to the current one, meaning that all this stock growth isn’t just a function of pot going from illegal to legal.

ACB Stock Prediction

The confidence surrounding Aurora Cannabis stock following the company’s revenue guidance (even though it technically fell short of expectations) means that investors are excited about Aurora Cannabis Inc.

My ACB stock prediction is now about as positive as it has been in a long while. Between this and the company’s other ventures (like its partnership with the Ultimate Fighting Championship (UFC) on research into pain management), there’s a lot going for the stock. (Source: “Aurora Cannabis and UFC Launch Clinical Research on Use of Hemp-Derived CBD Products by MMA Athletes,” Cision, July 24, 2019.)

That being said, Aurora Cannabis stock has been on a roller coaster ride of sorts in 2019. While much of the pot industry saw stock growth in 2019, including Aurora, there’s a lot more uncertainty with ACB; the stock’s performance has been uneven.

Chart courtesy of StockCharts.com

Still, that may not be such a bad thing.

Considering that ACB stock has been on a downswing lately, there’s a lot of room for growth moving forward. Between strong foundations and a number of impressive ventures on the go, I’m bullish on Aurora Cannabis Inc.

Analyst Take

Things have been looking up in the marijuana industry as of late.

Between Aurora Cannabis stock getting a strong boost after its recently announced revenue guidance increase and last week’s pot stock gains following Aphria Inc (NYSE:APHA) announcing that it showed profits, there’s a lot of positivity brimming around the marijuana stock market.

That’s exactly what pot investors want to see.