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Three Things to Watch in the Cannabis Sector After Tilray and Aurora's Earnings

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Tilray (TLRY) said first-quarter revenue rose 195% from a year earlier to $23 million, as sales in Canada surged following the country's decision to legalize cannabis for recreational use. The adjusted loss in the quarter was 27 cents a share, wider than analysts' estimates, after a 5.7% drop in the average price per kilogram sold.

CEO Brendan Kennedy also said Tilray was looking to further its partnerships with U.S. and international companies as the potential $150 billion global market for cannabis undergoes a generational change in both regulation and consumer acceptance.

On the other hand, Aurora Cannabis (ACB) posted fiscal third-quarter revenue of C$75.2 million, missing Wall Street forecasts of C$77.2 million and consumer cannabis sales were just under C$30 million as provincial regulators limited the number of retail outlets.

The company reported a loss attributable to shareholders in the quarter of $C158 million said Aurora Cannabis said it was "well positioned to achieve positive EBITDA beginning in fiscal Q4."

Action Alerts Plus senior analyst Jeff Marks broke down three things that investors should watch in the cannabis sector.

Speaker 1: (05:25)
"So I think there are three things you need to see in the industry, right? One: consider consolidation, right? When you have these companies need to gain scale quickly in order to meet not only meet demands but also just so they can to kind of distinguish themselves from each other. So I think consolidation would be one area where you could do that. Increase partnerships on both medicinal and consumer package side. And that's the same goes as with investments. So you know, Canopy Growth (CGC) , which is kind of the one that we like, has a huge investment from Constellation Brands (STZ) . So as these companies continue to get those types of investments in financial support. That's another way you could see these stocks go higher and...also legalization the United States. I mean that's obviously a clear one, but that's, that's out of their control. The other two are kind of more in their control, [but] legalization [is] out of their control, but something on the horizon," explained Marks. 

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