Aurora Cannabis stock fell on Friday, even as the Canadian cannabis producer said it expects fiscal first-quarter sales and adjusted margins to come in at the high end of its expected range. Other marijuana stocks were mixed.
The company sees fiscal first-quarter net sales coming in at the upper end of expectations for 60 million to 64 million Canadian dollars. That is still down from the 67.5 million it made in the prior quarter.
Aurora Cannabis has said that net sales would likely be made up almost entirely of cannabis, after divesting "noncore subsidiaries" during the prior fiscal year.
Aurora also expects adjusted gross margin to be at the high end of earlier views for 46%-50%. Sales, general and administrative costs for the quarter are expected to be in the low 40-million range, when excluding contract and employee termination costs.
'Market Realities'
Aurora Cannabis said it still expects to reach positive adjusted EBITDA in its second quarter. The Canadian cannabis producer had to push back that target this year as it wrestles with losses, disappointing sales and hefty charges as it tries to shrink its production footprint, align its supply with demand, and recognize what it said were "market realities." Aurora last month announced a new CEO. But activist investor Nelson Peltz also resigned as a senior advisor.
Marijuana stocks largely slid over the past two years as profits remained rare and investors grew concerned that more companies in the industry were running out of money. The bigger players in Canada that trade on major U.S. exchanges have laid off employees, shuttered production facilities and tamed their ambitions internationally.
Aurora is also trying to clean up its debt and shore up its cash reserves, and seek other ways to raise money. It said on Friday that it expects to be in "full compliance with all financial covenants" as of Sept. 30 under a revised credit line.
"Aurora's relationship with the lending syndicate remains strong and there are no new obligations to repay any portion of the credit facility until its stated maturity date," it said.
The company said it has filed a final base shelf prospectus. That would let it offer up to $500 million (USD) of shares, warrants, debt and other securities. Aurora earlier this week said its current cash position stood at 272 million Canadian dollars.
Marijuana Stocks, Aurora Cannabis Stock
Aurora Cannabis stock fell 1% to close at 4.05 in the stock market today. Shares have a weak Composite Rating of 2, on a 1-99 scale with 1 lowest possible. The EPS Rating of the stock is also weak, at 12.
Among other marijuana stocks, Canopy Growth recovered losses to finish flat. Tilray lost 4.4%. Aphria also reversed higher to edge up 0.2% to 4.50, forming a cup base with a 6.25 buy point. Cronos Group fell 5%, dipping below its 50-day line.
Hexo tumbled 15.5%. The company on Friday proposed an eight-for-one share consolidation — an effort to, it said, boost its stock price and regain compliance to stay listed on the New York Stock Exchange.
On Thursday, Hexo reported results for the fourth quarter. Sales jumped, but losses deepened from the prior quarter. The company's cannabis beverages — products Hexo placed a bigger bet on than some of its rivals — made up a small portion of its sales.
Marijuana stocks briefly rallied earlier this month, after U.S. Democratic vice presidential candidate Kamala Harris said an administration under her running mate, Joe Biden, would work to decriminalize marijuana.
