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Dec. 18, 2020, 2:45 p.m. EST

Aurora Cannabis stock falls again after BMO analyst turns bearish

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Tomi Kilgore

Shares of Aurora Cannabis Inc. fell again on Friday, after BMO Capital analyst Tamy Chen turned bearish on the Canada-based cannabis company, saying she is “unable to justify” current valuations.

Chen cut her rating to underperform from market perform, while revising her target on the stock /zigman2/quotes/210559470/composite ACB -2.24% /zigman2/quotes/203734337/delayed CA:ACB -2.25% C$9 from C$7.

That makes Aurora the only cannabis stock Chen is bearish on, as she has market perform ratings on all the other cannabis companies she covers.

She said the result of the U.S. election introduced “exceptional volatility” in cannabis stocks, with those she covers rallying between 50% and 100%, and with Aurora’s stock more than doubling. Many expect President-elect Joe Biden to push for reforms that will allow marijuana companies to access U.S. banks and capital markets.

Aurora’s U.S.-listed stock dropped 2.8% in afternoon trading Friday, putting in on track to suffer a third-straight loss.

The stock had soared as much as 146.9%, from the Nov. 2 close of $4.73 to a four-month closing high of $11.68 on Nov. 30, before paring some gains. At current prices, the stock is still up 1000% since Nov. 2.

Meanwhile, the ETFMG Alternative Harvest exchange-traded fund /zigman2/quotes/204332491/composite MJ +0.05% has climbed 32.7% since Nov. 2 while the S&P 500 index /zigman2/quotes/210599714/realtime SPX +1.95% has gained 11.7%.

Chen said that while Aurora has improved its balance sheet, by taking advantage of share price gains to sell stock , which is why she lifted her price target, her view of the company’s business “has not changed.” That leaves the stock’s valuation “out of line with fundamentals,” she said.

“We agree with [Aurora’s] actions so far, but we are unable to justify a higher multiple as [Aurora] attempts a turnaround that may or may not be successful,” Chen wrote in a note to clients.

She said that from her sensitivity analysis on Aurora’s premium strategy, she concluded that “it could take up to three years for [Aurora] to achieve sustainable profitability.”

Here are the other cannabis stocks Chen covers, all of which are rated market perform: Aphria Inc. /zigman2/quotes/207425803/composite APHA -5.98% /zigman2/quotes/205566616/delayed CA:APHA -6.06% , Tilray Inc. /zigman2/quotes/209129655/composite TLRY -4.50% , Canopy Growth Corp. /zigman2/quotes/200603886/composite CGC +0.52% /zigman2/quotes/202205609/delayed CA:WEED +0.41% , Cronos Group Inc. /zigman2/quotes/206842762/composite CRON -1.66% /zigman2/quotes/202715342/delayed CA:CRON -0.98% , Hexo Corp. /zigman2/quotes/206508254/composite HEXO -1.53% /zigman2/quotes/200008967/delayed CA:HEXO -2.29% and OrganiGram Holdings Inc. /zigman2/quotes/209289540/composite OGI -4.96%

/zigman2/quotes/210559470/composite
US : U.S.: NYSE
$ 9.60
-0.22 -2.24%
Volume: 15.41M
March 5, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$1.89 billion
Rev. per Employee
$76,070
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/zigman2/quotes/203734337/delayed
CA : Canada: Toronto
$ 12.15
-0.28 -2.25%
Volume: 5.31M
March 5, 2021 5:40p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$2.40 billion
Rev. per Employee
$102,126
loading...
/zigman2/quotes/204332491/composite
US : U.S.: NYSE Arca
$ 21.21
+0.01 +0.05%
Volume: 3.70M
March 5, 2021 8:00p
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/zigman2/quotes/210599714/realtime
US : S&P US
3,841.94
+73.47 +1.95%
Volume: 3.33B
March 5, 2021 5:44p
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/zigman2/quotes/207425803/composite
US : U.S.: Nasdaq
$ 15.71
-1.00 -5.98%
Volume: 30.47M
March 5, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$4.95 billion
Rev. per Employee
$337,179
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/zigman2/quotes/205566616/delayed
CA : Canada: Toronto
$ 19.84
-1.28 -6.06%
Volume: 7.77M
March 5, 2021 5:40p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$6.28 billion
Rev. per Employee
$451,949
loading...
/zigman2/quotes/209129655/composite
US : U.S.: Nasdaq
$ 21.63
-1.02 -4.50%
Volume: 27.01M
March 5, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$3.72 billion
Rev. per Employee
$204,351
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/zigman2/quotes/200603886/composite
US : U.S.: Nasdaq
$ 31.17
+0.16 +0.52%
Volume: 5.88M
March 5, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$11.72 billion
Rev. per Employee
$67,581
loading...
/zigman2/quotes/202205609/delayed
CA : Canada: Toronto
$ 39.45
+0.16 +0.41%
Volume: 1.78M
March 5, 2021 5:40p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$14.87 billion
Rev. per Employee
$89,935
loading...
/zigman2/quotes/206842762/composite
US : U.S.: Nasdaq
$ 9.48
-0.16 -1.66%
Volume: 5.73M
March 5, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$3.43 billion
Rev. per Employee
$70,043
loading...
/zigman2/quotes/202715342/delayed
CA : Canada: Toronto
$ 12.09
-0.12 -0.98%
Volume: 1.87M
March 5, 2021 5:40p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$4.36 billion
Rev. per Employee
$93,949
loading...
/zigman2/quotes/206508254/composite
US : U.S.: NYSE
$ 6.42
-0.10 -1.53%
Volume: 4.70M
March 5, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$779.96 million
Rev. per Employee
$75,208
loading...
/zigman2/quotes/200008967/delayed
CA : Canada: Toronto
$ 8.09
-0.19 -2.29%
Volume: 2.80M
March 5, 2021 5:40p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$989.54 million
Rev. per Employee
$101,233
loading...
/zigman2/quotes/209289540/composite
US : U.S.: Nasdaq
$ 2.68
-0.14 -4.96%
Volume: 12.02M
March 5, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$625.83 million
Rev. per Employee
$109,684
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