Cantor Fitzgerald assigned Tilray Inc. an overweight rating this week and said the new company — it recently closed its merger with Aphria Inc. — is alone among Canadian licensed producers with domestic scale and a credible overseas platform. Analyst Pablo Zuanic assigned the stock a $22 price target that is down from $30.25 before the merger, but about 11.5% above its current trading level. “Except in recent months (deal-related distraction?), Aphria was one of the best performers in Canada recreational (cannabis) achieving a #1 position (speaking in organic terms, and did so while achieving positive cannabis EBITDA), and Tilray ran ahead of peers in the export cannabis markets,” Zuanic wrote in a note to clients. “We do not see another LP that can make these combined claims.” Questions do remain however, about how the combined entity will meet some of its guidance, including a 30% share of the Canadian recreational market and a C$100 million ($82.4 million) cost synergy target, he wrote. Cantor is expecting the Canadian sector to enjoy favorable headwinds in the months ahead as consumer demand recovers from COVID and assuming some U.S. deregulation. Tilray shares were up 0.7% premarket and have gained 139% in the year to date, while the Cannabis ETF has gained 42% and the S&P 500 has gained 11.6%.
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