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Oct. 7, 2021, 2:50 p.m. EDT

Tilray shares climb as investors shrug off revenue miss and bigger-than-expected loss

Steve Gelsi

Shares of Tilray Inc. rose on Thursday despite a wider-than-expected loss from the Canadian cannabis producer, as the company reported a jump in sales in the face of pressures from the COVID pandemic.

Tilray (NAS:TLRY) (TSE:CA:TLRY) stock advanced by about 2.7%, adding to its 30.6% gain this year as of the previous close, compared with a rise of 12.5% for the Nasdaq (NASDAQ:COMP) .

The company said its first-quarter net loss increased to $34.6 million, or 8 cents a share, from a loss of $21.7 million, or 9 cents a share in the year-ago period, while net revenue jumped by 43% to $168 million from $117.5 million.

Tilray was expected to report a loss of 6 cents a share on sales of $172.6 million, according to an analyst survey by FactSet.

Tilray CEO Irwin D. Simon told MarketWatch the company posted a “good” revenue increase, gross margins widened by about 46% and it posted solid numbers on cost savings following its Aphria merger

Despite steep competition in the Canadian market, the company avoided cannabis price cuts and remains No. 1 in the Canadian market, he said.

“We did not discount the way a lot of other cannabis companies did,” he said. “Consumers are buying our products for the brand…and for our potency and strains.”

The company is also making forays into the U.S. through its SweetWater craft beer acquisition from a year ago, as well as CBD-infused consumer products from its Manitoba Harvest food brand.

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Cantor Fitzgerald analyst Pablo Zuanic on Thursday reiterated his overweight rating and $18 price target for the stock.

To some extent the…quarter was likely impacted by integration/transition issues, as well as by COVID-related events in Canada and Europe,” he said. “Looking forward, we see several positives: cost synergies are ahead of plan, the company is innovating across the domestic recreation and medical portfolio, it claims good momentum in the export markets, and M&A will remain part of the story.”

Tilray said it’s on track to achieve at least $80 million of cost savings from its merger deal with Aphria.

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Drilling down into the results, Tilray said its net cannabis revenue increased by 38% to $70 million, while its beverage unit rang up revenue of $15 million. The company garnered another $15 million in wellness revenue from Manitoba Harvest.

Simon said the results show that the company is executing on its objectives despite continued impacts from COVID-19 in Canada, as retail cannabis stores only began opening in mid-June, according to a statement.

The Cannabis ETF (PSE:THCX) has gained 1% in the year to date, while the AdvisorShares Pure US Cannabis ETF (PSE:MSOS) has fallen 14%.

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