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Aurora Cannabis Stock Rises; Cowen Lauds Cost-Cut Effort

Aurora Cannabis had a tough quarter. Cowen affirmed the stock neutral but took note of the company's cost-cutting effort.
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Aurora Cannabis stock climbed on Tuesday, after fiscal-fourth-quarter revenue lagged expectations but Cowen called the company's cost-cutting efforts "on track."

The investment firm affirmed the Calgary, Alberta, company's stock market perform and maintained its C$8.50 (US$6.69) target price on the shares.

At last check the Calgary company's shares traded on Nasdaq were 5.3% higher at US$6.73.

Fourth-quarter revenue of C$55 million was 3% below consensus and 10% below Cowen's estimate, analyst Vivien Azer wrote in a report.

The company's loss before interest, taxes, depreciation and amortization narrowed to C$19.3 million from C$33.3 million a year ago. 

The medical cannabis business saw a 9% revenue increase year over year to C$35 million. The company's consumer cannabis business saw a 45% decrease year over year to C$19.5 million. 

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Cowen revised lower its revenue estimates for fiscal 2022 to C$225.5 million, indicating 4% year-over-year growth.

Analysts surveyed by FactSet are expecting revenue of C$264.5 million for fiscal 2022. 

At the same time, Aurora “reiterated its target for C$60 million to C$80 million of cost savings, including the benefits of the facility closures that the company announced last week,” she wrote.

With the cost savings, the company expects positive adjusted Ebitda by the end of FY22, “even if revenues are flat sequentially from fourth-quarter 2021 levels (though management does expect growth),” Azer wrote.

"We model continued strength in gross margins, coupled with meaningful benefit to adjusted Ebitda from cost cuts," she added.

"Given ongoing challenges in the Canadian adult recreational market," Aurora Chief Executive Miguel Martin said in a statement, "our broad diversification across domestic medical, international medical, and adult recreational segments provides us with underlying strength, stability, and growth opportunities in an evolving industry for global cannabinoids,"