On Tuesday, TD Cowen adjusted its price target on Tilray shares (NASDAQ:TLRY), reducing it from $2.00 to $1.50, but kept a Buy rating on the stock. TD Cowen's analyst, Vivien Azer, provided insights into the company's recent performance and future expectations following the release of Tilray's second-quarter earnings.
Tilray reported quarterly sales of $211 million, which matched TD Cowen's projection but fell short of the broader market consensus of $218 million. The shortfall was attributed to a 16% decline in Canadian adult-use cannabis sales. Furthermore, the company's adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of $9 million also did not meet the consensus estimate of $11.2 million.
Despite these figures not meeting expectations, Tilray's management anticipates a rebound in the third quarter. The company is set to refocus on categories that had been previously de-prioritized, which were partly responsible for the recent sales decline. This strategic shift is expected to drive sequential growth.
Azer has maintained the forecast for Tilray's fiscal year 2025 sales at $900 million. However, the firm has revised its FY25 EBITDA estimate downward to $62 million from the previous $67 million, suggesting an EBITDA margin of 7%. The new price target of $1.50 per share is based on an 18x EV/EBITDA multiple applied to the firm's next twelve months forward estimate of $83 million.
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