Jefferies maintained a positive stance on Tilray (NASDAQ:TLRY), reaffirming a Buy rating and a $2.50 price target for the cannabis company. The firm acknowledged a mixed financial quarter for Tilray, noting deliberate sales misses due to a strategic focus on profitability and the timing of certain shipments. The cannabis segment experienced a 13% decline as the company strategically exited unprofitable sub-segments. However, the beverage alcohol sector saw significant growth of 132%, although this was below the anticipated 179% growth due to an extended distributor transition period and recent acquisitions.
The distribution segment of Tilray's business experienced a slight decline of 1.6%, which was just below the Street's estimate of a 1.1% decline. On the positive side, the wellness division of the company reported a 10.9% increase, outperforming the Street's forecast of a 5.1% rise. The company's financial guidance for fiscal year 2025 remains unchanged, with expected revenues between $950 million and $1 billion.
Tilray's gross margin percentage saw an expansion of 207 basis points, attributed to a better product mix and reduced costs. The firm's statement highlighted this improvement as a step in the right direction for Tilray. Despite the mixed results in certain segments, the overall positive outlook reflects confidence in the company's strategic decisions and future performance.
In other recent news, Tilray Brands, Inc. reported a mixed bag of results for its first quarter ended August 31, 2024. The company exceeded earnings expectations but fell short of projected revenue, posting an adjusted earnings per share of -$0.01, better than the -$0.04 analyst estimates. However, the revenue was $200 million, below the consensus forecast of $218.88 million.
Tilray's net revenue saw a year-over-year increase of 13%, rising from $177 million in the prior year quarter. The company's beverage alcohol segment experienced significant growth, with revenue including acquisitions surging 132% to $56.0 million. Gross profit also rose 35% year-over-year to $59.7 million, with the gross margin expanding to 30% from 25% a year ago.
Net loss improved by 38% to $34.7 million or $0.04 per share, compared to a loss of $55.9 million or $0.10 per share in the prior year period. Despite these developments, Tilray's adjusted EBITDA for the quarter was $9.3 million, down from $10.7 million in the same period last year.
InvestingPro Insights
Tilray's recent performance aligns with several InvestingPro Tips and metrics, providing additional context to the Jefferies analysis. Despite the mixed quarterly results, InvestingPro data shows that Tilray's revenue growth remains strong, with a 25.8% increase over the last twelve months. This growth supports the InvestingPro Tip that "Analysts anticipate sales growth in the current year," aligning with Tilray's guidance of $950 million to $1 billion in revenue for fiscal year 2025.
The company's focus on profitability, as mentioned in the Jefferies report, is reflected in the InvestingPro Tip that "Net income is expected to grow this year." This expectation is particularly significant given that Tilray "Operates with a moderate level of debt" and has not been profitable over the last twelve months.
Investors should note that Tilray is "Trading near 52-week low," which could present an opportunity given the positive outlook from analysts. The stock's price-to-book ratio of 0.41 suggests it may be undervalued relative to its assets.
For those interested in a deeper dive into Tilray's financial health and prospects, InvestingPro offers 11 additional tips, providing a comprehensive view of the company's position in the evolving cannabis and beverage alcohol markets.
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