Cantor Fitzgerald said Monday it is sticking with its overweight rating on troubled Canadian cannabis company Aurora Cannabis Inc. /zigman2/quotes/210559470/composite ACB 0.00% /zigman2/quotes/203734337/delayed CA:ACB -0.48% because it expects the Canadian licensed producers to rerate in the year ahead. In a note to clients, analyst Pablo Zuanic said he's comfortable with the recent actions taken by the company to shore up its balance sheet and profit margins. While it may take time for the company to regain investor confidence, its recent underperformance versus peers seems overdone. The stock has fallen 25% in the last 30 days, versus an 8% decline for the overall group and is down 64% in the last 90 days compared with a 39% decline for the overall group, he wrote. Zuanic highlighted two metrics that make him optimistic; Aurora's recreational sales in Canada are second only to those of market leader Canopy Growth Corp. /zigman2/quotes/200603886/composite CGC -0.12% /zigman2/quotes/202205609/delayed CA:WEED -1.12% over the last five quarters; and it is one of just five companies that have been able to maintain new recreational prices above $5.20 a gram. The analyst raised his 12-month price target on Aurora stock to C$3.80 ($2.86) from C$3.75. "We do not factor optionality upside from the appointment of a new high-profile CPG CEO and or from a CPG partnership, but certainly that would imply greater upside," he wrote. Aurora's U.S.-listed shares were down 6% premarket and have fallen 76% in the last 12 months. The ETFMG Alternative Harvest ETF /zigman2/quotes/204332491/composite MJ -0.46% has fallen 55% in the same period, while the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.45% has gained 20%.
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Aurora Cannabis downgraded as Canadian sector struggles, but one analyst is upbeat