The rating reflects the positive outlook for the cannabis industry that is growing at a rapid pace, boosted by the strategic buyout deals and partnerships among the top players. The increasing acceptance of medical cannabis across global markets and the fast adoption of pot-based medicines as a replacement to conventional treatments brighten Tilray’s near-term prospects further.
The company’s tie-up with drug maker Novartis (NVS) gives it an advantage over rivals when it comes to taking forward the research activities in marijuana-based formulations for medical treatment. While the association helps in removing the taboo surrounding cannabis, it also adds momentum to Tilray’s near-term growth initiatives in the areas of production, cultivation, and distribution.
The company has clinched close to half-a-dozen buyout deals since the beginning of 2019. That the sector is bracing for a consolidation spree indicates that early players like Tilray could reinforce their market-leader status in the long run.
Also See: Tilray to report Q4 earnings on March 18
In the latest of the M&A deals, which also marked its entry into the food and drinks market, the Canadian firm last month acquired hemp food company Manitoba Harvest. One of the main attractions of the multi-million dollar deal is Manitoba’s extensive distribution network that complements Tilray’s future plans.
Tilray shares have maintained a steady momentum after descending from their peak in September last year. The stock made some sharp gains and crossed the $100-mark early this year. It moved up about 5% in early trading Wednesday but pared the gains as the session progressed.