Shares of Aurora Cannabis (ACB) - Get Report were falling 7.1% to $5.53 Monday after an analyst from Stifel Nicolaus cut his rating on the medical cannabis products company to sell from hold and slashed his price target to C$5 ($3.78) from C$7 ($5.27.)
Analyst W. Andrew Carter advised selling the Edmonton-based company "following what we viewed as a disappointing 4Q19 earnings release pointing to a less robust in-market performance and difficulty to continue positioning for the larger global opportunity."
Aurora Cannabis said sales rose 52% to C$98.9 million ($75 million), falling just shy of the Wall Street consensus of $78 million. Net revenue for the full year, Aurora said, rose 350% from the prior period to C$247.9 million. Cannabis sales volumes over the April to June period, Aurora said, nearly doubled from the prior quarter to 17,793 kilograms, but average selling prices slipped 16.8% from the third quarter to C$5.32 per gram as lower-yielding recreational marijuana flooded the domestic market.
"We believe Aurora's financing efforts will be challenged against the backdrop of overwhelmingly negative investor sentiment towards the sector, damaged credibility, and limited catalysts near-term to drive enthusiasm for the shares," Carter wrote.
Carter said Aurora has given "mixed commentary on pursuing partnerships, but we believe the company will be required tocontinue pursuing an independent path with Global Consumer companies likely taking a wait-and-see approach to the sector with less incentive to partner with a Canadian LP."
He also said he believed "Aurora will be challenged in its ability to continue investing aggressively especially to establish a U.S. position."