Aurora Cannabis Inc.

Aurora Cannabis Inc. (NASDAQ: ACB) is a medical cannabis company based in Canada. The Company's key business lines are cannabis and cannabis-related products production, distribution, and sale in Canada and internationally. Aurora, Aurora Drift, San Rafael '71, Daily Special, MedReleaf, CanniMed, Whistler, Reliva, and KG7 CBD are among the Company's brands.

Key Highlights

• The company reported YoY decline of 10.47% in net revenue to CAD 60.59 billion in Q2FY22(ended December 31, 2021) compared to CAD 67.67 billion in Q2FY21.
• ACB reported net loss of CAD 75.14 million in Q2FY22 vs. CAD 297.92 million in Q2FY21.
• As of December 31, 2021, the company had cash and cash equivalents (including short-term investments) of CAD 334.08 million and total debt of CAD 414.45 million.
• ACB announced on March 22, 2022, that it had reached an agreement to acquire all of TerraFarma Inc.'s issued and outstanding shares (parent company of Thrive Cannabis). The Transaction is based on a total consideration of USD 38 million in cash and Aurora common shares, plus two earnout amounts payable in Aurora Shares or cash if Thrive meets specific revenue targets within two years of the Transaction's closing.
• Its ROE was -3.8% in Q2FY22, whereas the industry median stood at 0.1%.
• Stock is currently trading below its crucial short-term (50-day) and long-term (200-day) SMA support levels, a bearish indicator.
• The stock is leaning towards the lower end of its 52-week range of USD 2.89 to USD 10.64.

Conclusion: Considering the company’s growth in topline, reduction in net losses, technical indicators, and associated risks, we recommend a "Watch" rating on the stock at the closing price of USD 4.04, up 10.99%, as of March 24, 2022.

Technical Price Chart (March 24, 2022). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

*Closing price as of March 24, 2022.

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.