According to analysts from Cowen & Co., Aurora Cannabis, a cannabis-centric company based in Canada, is likely to be "among the first Canadian cannabis companies to reach profitability," naming the company as their top pick in the steadily growing marijuana industry, a "title" previously held by Canopy Growth.
As a result, both Aurora Cannabis stock and Cronos stock jumped, while other marijuana stocks were more mixed in their gains.
Top profit
According to Vivien Azer, who's an analyst for Cowen and the first Wall Street Analyst to cover the cannabis industry, Aurora Cannabis definitely has the potential to push a key profitability metric into the black long before other big cannabis companies like Canopy Growth and such. Per Azer, Aurora's early gains in the cannabis market (the company has been active long before Canada decided to fully legalize marijuana), as well as its immense cultivation capabilities are definite advantages in the space.
In a release, Azer said, While establishing 20% market share has been an early success story in Canadian adult use cannabis, the company is uniquely positioned to drive leadership in both share and profitability."
Of course, the cannabis industry, even the legal one in Canada, is still experiencing some definite bumps on the road. In fact, Cowen's calls on Aurora and Cronos come at a time when Canada's recreational market is experiencing shortages on weed and strains. Per analysts and executives, these shortages can easily continue throughout this year. The same analysts have commented that this is perhaps because Canada's provinces, which mainly provide the supply, may have underestimated the demand that came with full legalization.
Despite this, however, Azer said that Aurora Cannabis is still on track to reach positive EBITDA - or otherwise known as earnings before interest, taxes, depreciation, and amortization - by the month of June. If achieved, the move would make Aurora among the first licensed pot producers to do so, way ahead of other competitors in the field.
Per Azer, Aurora's higher gross of margins and containment of expenses that are not related to pot production would help push its EBITDA forward.
The latter part of last year proved to be a really challenging yet exciting one for the world, as Canada made history back in October 2018 by fully legalizing the recreational use of marijuana. This allowed various marijuana companies to finally partake in the field and grow their own businesses.