MKM Lowers Aurora Price Target On Softening Cannabis Industry Forecast

Aurora Cannabis Inc (NYSE: ACB) stock is down 30.03% on a year-to-date basis, and 35.1% over the last 30 days.

The Analyst

MKM Partners analyst Bill Kirk maintained a Sell on Aurora and lowered the price target from CA$5 ($3.78) to CA$3.50 ($2.65). 

The Thesis

MKM has three reasons for cutting the price target, Kirk said in a Monday note: 

• Industry pricing has fallen. 
• The illicit cannabis price gap has widened. 
• Aurora’s new store openings in Quebec and Ontario are not meeting expectations.

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The cannabis company warned during its Sept. 12 earnings call that July and August were slower, and given HEXO Corp (NYSE: HEXO)'s commentary and pace of new stores, MKM has concluded it's unlikely September and early October were any better, the analyst said. 

MKM lowered its first-quarter 2020 net sales estimate from CA$117 million to CA$98 million and cut the adjusted EBITDA estimate from CA$14 million to CA$21 million.

"We believe there is still some estimate optimism to shake and trim from the industry," Kirk said. 

Price Action

Aurora shares were down 6.52% at $3.44 at the time of publication Monday. 

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Photo courtesy of Aurora.