Tilray shares jumped and traded higher after the Canadian cannabis composted impressive earnings that beat expectations, although its revenue figures missed forecasts.
Tilray (ticker: TLRY) posted its third-quarter adjusted earnings of 9 cents a share, exceeding expectations for a loss of 8 cents a share. Net revenue increased 23% to $152 million, on the back of a 32% growth in the cannabis revenue and a 64% increase in the beverage alcohol revenue. According to FactSet, analysts were expecting $156.2 million in revenue.
Despite this, investors were excited by Tilray’s sneak peek at guidance. The company confirmed to its investors that it was still on track to make $4 billion in revenue by the end of the fiscal year 2024, said CEO Irwin Simon.
Cannabis revenue on an international scale rose 4,000% over the previous year’s quarter, the company announced, and it maintained its lead market share in Canada, collecting 10.2% of the share. EMEA revenue rose by 37%, the company said, while U.S operations equally became more profitable.
“In the U.S, our SweetWater Brewing, Breckenridge Distillery, and Manitoba harvest businesses are profitable, growing and emerging as nationwide, iconic brands with loyal followings that will be home to THC- based products upon U.S federal legalization,” Simon said.
Last week, the House of Representatives passed a bill to decriminalize marijuana at the federal level.
Although the bill might make it passed the Senate, the move has renewed hope of the possibility that marijuana will be legalized sometime in the future.
Tilray stock gained 9% to $7.64 on Wednesday.
However, a few analysts were a little less optimistic about the results posted by the company. MKM Partners’ Bill Kirk maintained a Neutral rating and an $8 price target after pointing to the fact that Tilray’s adjusted EBITDA was “lighter than they expected” at $10.1 million. In addition, the cannabis segment’s adjusted gross margin indicated “signs of pricing pressure,” he said, a contraction from 39% to 33%.
He was also concerned that the company’s domestic and international market share goals seemed pretty overly ambitious.
“Directionally, current share trends are going the wrong way,” he wrote. “Tilray is addressing this by getting more aggressive on price, but share gains remain elusive in the interim.”