Aurora Cannabis posts profit with 87% EBITDA growth, shares jump 11%: Is it too late to invest?

Aurora Cannabis Inc. (NASDAQ: ACB) reported a return to profitability in its first fiscal quarter, driven by the strength of its medical cannabis division. 

Shares of the licensed cannabis producer surged 11% on Wednesday following the announcement.

Impressive financial turnaround

The Canadian company reported C$4.8 million in net income for the quarter, a significant turnaround from the C$20.2 million loss recorded in the same period last year. 

This remarkable performance was bolstered by a 16% year-over-year increase in plant propagation revenue, which reached C$23.1 million ($16.84 million). 

Consequently, Aurora’s overall revenue climbed to C$83.4 million, surpassing analysts’ expectations of C$77.6 million and the C$74.7 million reported in the previous year.

Medical cannabis: The driving force

Aurora’s medical cannabis segment experienced a robust 13.5% growth, with revenues reaching C$47.2 million. 

This growth offset a 10% decline in consumer cannabis revenue, which fell to C$11.5 million. 

The strength in the medical cannabis sector also contributed to an 87% increase in adjusted EBITDA, which rose to C$4.9 million.

CEO Miguel Martin expressed confidence in the company’s ability to build on its achievements in key markets such as Germany, Australia, and the UK. 

Martin highlighted Aurora’s commitment to operational excellence and strategic growth, aiming to sustain positive momentum and enhance its market position.

Positive free cash flow and fiscal discipline

Aurora Cannabis also reported a positive free cash flow of $6.5 million for the quarter. 

The company attributed this success to continued strength in medical cannabis, fiscal discipline, and a solid balance sheet. 

Martin emphasized these factors as critical to maintaining positive free cash flow and supporting Aurora’s long-term growth strategy.

Despite the positive earnings report, Aurora Cannabis stock is still down more than 30% from its year-to-date high in late April. 

However, the stock has rallied over 100% in the past five months, reflecting growing investor confidence in the company’s turnaround efforts.

Analyst say ‘hold’

Wall Street analysts have a consensus “hold” rating on Aurora Cannabis stock, with a target price of approximately $6.34 per share. 

This valuation is roughly in line with the stock’s premarket trading price on Wednesday, suggesting that the current market sentiment may consider the stock fairly valued.

Is it too late to invest?

The positive earnings report and significant growth in the medical cannabis segment have reinvigorated investor interest in Aurora Cannabis. 

However, potential investors should note that the stock does not currently pay a dividend, and with its recent price surge, it may be seen as fully valued by the market. 

As such, it might be prudent to carefully consider the stock’s future growth potential and market conditions before making an investment decision.

Aurora Cannabis’ return to profitability and strong performance in the medical cannabis sector marks a significant milestone for the company. 

However, investors should remain cautious and consider the stock’s valuation and market dynamics before making any investment decisions.

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