The Zacks Analyst Blog Highlights: Scott's Miracle Grow, GW Pharmaceuticals, Canopy Growth, Tilray and Aurora Cannabis

For Immediate Release

Chicago, IL – May 10, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Scott’s Miracle Grow SMG, GW Pharmaceuticals GWPH, Canopy Growth CGC, Tilray TLRY and Aurora Cannabis ACB.

Here are highlights from Thursday’s Analyst Blog:

Buy These Marijuana Stocks Before Earnings?

The marijuana industry has transformed from a widespread illegal market into a booming multibillion-dollar legal industry, with companies from Scott’s Miracle Grow to GW Pharmaceuticals set to make money of the legalization of cannabis. With that said, the legal pot industry is still in the early stages, so let’s see if investors should consider buying some pure-play marijuana stocks heading into earnings.

Quick Overview

Cannabis has been legalized in some form in 33 states plus D.C. and it is completely legal in Canada for recreational and medicinal use. The industry is set to skyrocket from $9 billion in 2017 to an estimated $32 billion by 2020. As we mentioned, huge public companies such as Scott’s Miracle Grow and Constellation Brands have all made bets on the future of legalized marijuana in some form or another.

For instance, Constellation has invested roughly $4 billion into Canadian marijuana grower Canopy Growth. Meanwhile, GW has seen continued success its cannabis-based epilepsy drug Epidiolex in phase 3 clinical trials. Epidiolex is already approved by the US FDA for two rare forms of epilepsy, but is still pending approval for a larger set of seizure disorders that could represent a huge windfall.

As we touched on already, we are still in the very early days of the marijuana industry and stocks have fluctuated somewhat wildly. So, let’s take a look at what to expect from Tilray and Aurora Cannabis next week to see if investors might want to dip their toes into the market and buy some pot stocks.

Tilray

Tilray, which reports its Q1 fiscal 2019 financial results on Tuesday, May 14, is essentially a marijuana grower. The British Columbia-based firm researches, cultivates, produces, and distributes cannabis and cannabinoids to twelve countries. Shares of TLRY are up over 100% since the company went public last summer, but are down 35% this year and are currently trading for roughly $46 a share.

Looking ahead, the company is projected to report revenue of $20.93 million, based on our current Zacks estimates. Tilray is also expected to report an adjusted quarterly loss of $0.25 per share and has seen its earnings revisions trend in the wrong direction. The company has also missed bottom-line estimates by over 90% in two out of the last three quarters.

With that said, Tilray’s full-year revenue is projected to skyrocket 365% to $200.9 million. Despite the projected top-line growth, its fiscal 2019 earnings are expected to fall by 56%.

Aurora Cannabis

Like its grower peer, Aurora Cannabis is set to report its third-quarter fiscal 2019 results after the market closes on Tuesday, May 14. The Edmonton, Alberta, Canada-headquartered firm hopes to benefit from the relatively quick expansion of the legalized recreational marijuana business. ACB stock is down roughly 22% since Aurora went public. Yet, shares of Aurora have soared 70% in 2019 to rest at around $8.45 per share.

The company’s quarterly earnings are projected to jump 25% from a loss of $0.04 per share in the prior-year quarter to $0.03 a share. More impressively, the company’s revenue is projected to skyrocket roughly 300% to $50.9 million, fueled by Canadian legalization. Peeking ahead, the company’s adjusted full-year EPS figure is projected to tumble 250% on 360% revenue expansion.

Bottom Line

In the end, investors should remember that these marijuana pure plays aren’t widely covered by analysts just yet, which can cause big quarterly beats and misses. Pot stocks have also seen their prices go on a roller coaster rides as demand often can’t match supply. Therefore, most marijuana stocks should be considered home run-type picks that could go boom or bust over the next several years—which doesn’t mean you shouldn’t take a few swings.

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