Aurora Cannabis (ACB) earnings preview: What to look for in Q1 report

Aurora Cannabis, Inc. (NYSE: ACB) is all set to publish its first-quarter results Thursday after the closing bell. The company continues to ride on the growing market for medical marijuana products in Canada and the international market. Analysts’ consensus estimate is for a loss of $0.03 per share on revenues of $72.8 million.

Going by the recent trend, Aurora is likely to emerge from the red in the to-be-reported quarter, helped by another strong revenue growth. Both the consumer and medical marijuana segments are expected to register sales growth, with higher production at the company’s key facilities contributing to the uptick.

Related: Can beer companies expect new fizz from cannabis

The core segment witnessed steady expansion in the recent quarters, when costs per unit production/sales declined progressively. In a recent statement, the company had hinted at reporting positive EBITDA in the early months of the current fiscal year. However, the general slump in the cannabis market, amid vaping-related deaths and regulatory issues, is a cause for concern when it comes to the first-quarter performance.

Growth Strategy

The top-line is estimated to have benefited from Aurora’s expansion in the US market, through strategic initiatives like the recent partnership with martial arts organization UFC to explore CBD-from-hemp and hemp food products. Going forward, sales of core products will gather further momentum towards the end of 2019, when the management is expected to launch several new products.

Crowded Market

Meanwhile, the growing competition in the sector could be a drag on profitability. Among others, Tilray (TLRY) reported a wider net loss for the third quarter that also missed the Street view, despite a five-fold annual increase in revenues. Canopy Growth (CGC) is scheduled to report its second-quarter results Thursday early morning.

Q4 Outcome

For the fourth quarter, Aurora reported a net loss of C$2.26 million on revenues of C$98.9 million, which fell short of expectations. The results represented an improvement from the preceding quarter when the company recorded a significantly higher loss and lower revenues.

Related: Aurora Cannabis Q3 2019 Earnings Call Transcript

Shares of Aurora traded lower in recent weeks, after starting the year on a positive note. The stock lost 33% so far this year and 45% in the past twelve months.

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