A Cowen analyst affirmed an outperform rating on Aurora Cannabis stock.
Analyst Vivien Azer based the rating on her expectations for the cannabis company to more carefully control production costs, selling, general and administrative expenses and capital spending, while restructuring debt covenants. The analyst has a price target of C$6, or US$4.60 on the shares.
Azer said management is "working with its creditors to restructure" its debt covenants. She feels “encouraged” that Aurora’s inventory levels are in focus, and that that should aid better working capital management.
According to Azer, Aurora is well-positioned to benefit from the legal recreational cannabis market in Canada and global medical cannabis market.
However, Azer also mentioned risks of lower-than-expected revenue and profit - due to stricter regulations on cannabis, and possibilities of consumer demand lagging expectations and supply-chain execution undergoing challenges.