Cannabis producer Aurora Cannabis (NYSE: ACB) reiterated its production and revenue guidance for the fourth quarter and fiscal 2019 after evaluation of its business conceded strong delivery. The global cannabis market is a rapidly developing business opportunity and the company intends to dominate the industry in terms of scale and profitability.
The company predicts net revenues in the range of $100 million to $107 million and net cannabis revenue in the range of $90 million to $95 million for the fourth quarter. The growth is anticipated to be across all key business segments including medical, both Canadian and international, and consumer markets.
Production available for sale for the fourth quarter is expected to be at the upper end of the 25,000 to 30,000 kilograms range, ahead of its previous forecast of 25,000 kilograms. For fiscal 2019, Aurora Cannabis anticipates total revenues in the range of $249 million to $256 million.
With the implementation of new regulations permitting the sale of a broader portfolio of derivative products later this year, the company plans to allocate a sizable fraction of this production of the inventory for further processing. This will ensure a broad portfolio of new products in sufficient quantities available for sale is under Aurora’s hood when the higher-margin products will be permissible in Canada.
The evolving market is now estimated to be $3 billion annual medical and $9 billion annual adult-use markets in Canada, according to reports from BMO Capital Markets and Deloitte. Further, the legalization of cannabis products could increase the estimated future global market to over $70 billion annual medical and $115 billion annual adult-use consumption.
In stiff competition with other companies, Aurora Cannabis is expected to invest significantly in research and development, market development, marketing, production expansion, new client identification, distribution channels, and client support. The company believes in its ability to achieve competitive per-unit costs through increased production and to recognize higher margins through the sale of higher-margin products.
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For the third quarter, Aurora Cannabis reported a wider loss due to higher costs and expenses despite a 305% jump in revenue. In Q3 2019, Aurora produced 15,590 kilograms of cannabis compared to 7,822 kilograms in the prior quarter and 1,206 kilograms in the prior-year quarter.
Shares of Aurora ended Monday’s regular session down 2.21% at $6.19 on the NYSE. Following the reiteration release, the stock advanced over 6% in the premarket session.
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