Aurora Cannabis Inc. (TSX:ACB) (NYSE:ACB) is back in the news today with some news that could inspire optimism among investors.
After a disappointing start to the new year that saw ACB lose 23.6% of its value in less than two weeks, the stock has already bounced back to its pre-2020 price. While it still has a long way to go to make up for its 2019 losses, at least Aurora has a chance to redo its 2020. Rich remains optimistic about the company’s future.
“There will be a cannabis stocks resurrection, and when it happens, Aurora Cannabis will explode,” says Rich. Let’s find out where ACB goes from here.
Analysts Back Aurora, Put Price Target at $6.00
Cowen analyst Vivien Azer affirmed that Aurora will outperform its forecast numbers.
This affirmation is based on expectations that the company will more carefully control production costs, selling, general, and administrative expenses, as well as capital spending, while it restructures existing debt covenants.
Azer set a price target of C$6.00 for Aurora Cannabis. From the stock’s current price of $2.08, this would represent a remarkable $188.46 increase.
However, as noted, ACB already shed nearly 80% of its value in 2019, falling from a high of $10.32. While negative sentiment has hit the company hard, Rich says there’s reason to be optimistic.
“All the negative sentiment led analysts to predict ACB would go to $1.00,” he says. “But now this stock is moving. Why? Because people know it’s too big to fail.”
Some Wall Street experts, such as Cantor Fitzgerald analyst Pablo Zuanic, are increasingly bullish about Aurora Cannabis’s future.
“This note should not be interpreted as an analyst defending a stock, but highlighting an attractive investment opportunity,” Zuanic wrote in a recent research note. “We would make use of the recent pullback.”
Rich also notes that the current price presents an incredible buying opportunity for pot stock investors.
“You could not get in ACB at prices this low since 2017,” he adds. “So of course it’s a ‘buy.’ These are incredible prices. The only question is, how high is it going to go?”
Ultimately, Rich predicts Aurora could go as high as $10.00 in 2020.
How Aurora Cannabis Can Capitalize
In Rich’s last profile of Aurora, he discussed the company’s roll-out strategy for cannabis consumables.
Importantly, Aurora’s 2.0 products will be available in all 10 Canadian provinces. The initial shipments for recreational items are awaiting approval from provincial regulators.
ACB CEO Terry Booth said of the roll-out strategy:
“We are ready and have launched a diversified portfolio of new product formats and are excited for Canadians to have access to high-quality, safe alternative cannabis products such as edibles, vape pens and other derivatives. We have prudently deployed capital and we believe that we’re ready with the appropriate combination of technology, scale and consumer insights to have the right products on store shelves in a timely fashion.”
Still, investors will have to wait a few more months before revenue from these products begins affecting margins. In the meantime, Aurora Cannabis’s recent jump has boosted the cannabis industry, as a majority of pot stocks are in the green today.
“I don’t think enough people understand how big Aurora is,” says Rich. “We have found the bottom on ACB, and we’ve found the bottom for the sector. Now we’re going up.”
What do you think? Let us know what your plans are for Aurora Cannabis.
Featured image: Canva