Recommendation: Speculative Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 26 Aug, 25 | ACB | Speculative Buy | USD 5.23 | USD 5.5 | USD 5.9 | 2 days | Closed |
8.60%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
Aurora Cannabis Inc., together with its subsidiaries, engages in the production, distribution, and sale of cannabis and cannabis-derivative products in Canada and internationally. It operates through two segments, Canadian Cannabis and Plant Propagation. The company offers medical and consumer cannabis products; supplies propagated vegetables and ornamental plants; and distributes and sells hemp-derived cannabidiol (CBD) products. The company also cultivates and sells dried cannabis, cannabis oils, capsules, edible cannabis, cannabis extracts, and soft gels, which are ingested in various ways, including smoking, vaporizing, and consumption in the form of oil, capsules, dried flowers, vapes, dried milled strains, edibles, concentrates, and strain specific cannabis oils and extracts; and provides patient counseling and outreach services. Its adult-use brand portfolio includes Aurora Drift, San Rafael '71, Daily Special, Whistler, Being, and Greybeard, as well as CBD brands, Reliva and KG7; and medical cannabis brands include MedReleaf, CanniMed, Aurora, Whistler Medical Marijuana Co, Pedanios, Bidiol, and CraftPlant. The company was founded in 2013 and is headquartered in Edmonton, Canada.
Strong Free Cash Flow Generation: Free cash flow rose 42% YoY, increasing to CAD 9.2 million in Q1 FY2026 from CAD 6.5 million in the prior year, reflecting improved cash efficiency
Significant Growth in Adjusted EBITDA: Adjusted EBITDA increased 209% YoY, reaching CAD 10.8 million in Q1 FY2026 compared to CAD 3.5 million in Q1 FY2025, highlighting stronger profitability
Weakness in Consumer Cannabis Business: Consumer cannabis net revenue fell 32% YoY, declining to CAD 7.9 million in Q1 FY2026 from CAD 11.5 million in Q1 FY2025, as the company prioritized its higher-margin medical cannabis segment
Reversal to Net Loss: The company recorded a net loss of CAD 19.4 million in Q1 FY2026, compared to net income of CAD 3.5 million in Q1 FY2025, signaling a sharp profitability decline
Aurora Cannabis faces concentrated dependence on its international medical cannabis segment, where regulatory changes, pricing pressures, or supply chain disruptions could materially impact its revenue growth and profitability
| Entry Price | Support* | Target 1** | Target 2** |
|---|---|---|---|
| 5.23 | 4.8 | 5.5 | 5.9 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
**Target prices may vary by ±0.5% depending on market volatility.
Strong Revenue Growth in Core Medical Cannabis Segment: Aurora Cannabis Inc. reported consolidated net revenue of CAD 98.0 million in Q1 FY2026, reflecting a 17% increase from CAD 83.4 million in the prior-year period. This growth was primarily fueled by a 37% increase in global medical cannabis sales, which reached CAD 64.8 million. The medical cannabis division contributed 66% of total revenue and 91% of adjusted gross profit before fair value adjustments, underscoring its position as the company’s strongest segment. International markets, particularly Germany, Poland, Australia, and the UK, drove the revenue expansion alongside higher contributions from Canadian patients.
Margin Expansion Driven by Operational Efficiencies: The company achieved a consolidated adjusted gross margin of 52% in Q1 FY2026, compared to 42% in the same quarter last year, reflecting a 10 percentage point improvement. Within medical cannabis, adjusted gross margin rose modestly to 69% from 67%, supported by cost reductions, higher pricing, and improved production efficiency. The consumer cannabis segment also experienced an improvement in gross margin, rising to 33% from 20% year-over-year, largely due to cost optimization initiatives despite lower revenue contribution.
Ongoing Weakness in Consumer Cannabis Business: Consumer cannabis net revenue declined 32% year-over-year, falling from CAD 11.5 million in Q1 FY2025 to CAD 7.9 million in Q1 FY2026. This decline was attributed to the company’s strategic focus on allocating production capacity toward the higher-margin medical cannabis segment. While this decision has improved overall profitability, it highlights a continuing weakness in the consumer cannabis division, which contributes minimally to Aurora’s financial performance.
Mixed Performance in Plant Propagation Business: Aurora’s Bevo plant propagation business generated CAD 23.9 million in revenue during Q1 FY2026, representing a modest 4% increase from the prior year. However, adjusted gross margin declined significantly to 6% compared to 18% in Q1 FY2025. The weaker margin was largely due to CAD 1.6 million in inventory write-offs tied to a one-time quality issue and unsold surplus crops. Excluding these costs, adjusted gross margin would have been 14%, indicating that profitability challenges remain within this segment despite revenue growth.
EBITDA and Free Cash Flow Strength: Adjusted EBITDA surged 209% year-over-year, reaching CAD 10.8 million compared to CAD 3.5 million in Q1 FY2025. Free cash flow also improved significantly, rising 42% to CAD 9.2 million from CAD 6.5 million in the prior year. These results reflect stronger operating performance, disciplined expense management, and improved cash generation, positioning Aurora for continued progress toward sustainable profitability.
Increased Operating Costs and Net Loss Reversal: Adjusted SG&A expenses increased 19% year-over-year, rising to CAD 37.4 million compared to CAD 31.4 million in Q1 FY2025. This increase was mainly driven by higher freight and logistics costs related to European sales and incremental expenses following the acquisition of MedReleaf Australia. As a result, the company recorded a net loss of CAD 19.4 million in Q1 FY2026, compared to net income of CAD 3.5 million in the prior year, representing a reversal of profitability due to increased expenses and lower gross profit contribution.
Outlook and Strategic Focus: Aurora anticipates consolidated net revenue growth in Q2 FY2026, driven primarily by an expected 8–12% increase in global medical cannabis sales. The company also projects margin expansion within its cannabis operations, while plant propagation is expected to follow typical seasonal trends. Management reaffirmed its outlook of achieving positive annual free cash flow for the second consecutive year, supported by disciplined execution and a focus on high-margin international medical cannabis markets.
Technical Commentary: ACB's share price has formed solid support at key levels and is gradually climbing, indicating a possible short-term upward trend. The 14-period RSI remains above the midpoint, reflecting growing buying momentum. Furthermore, the stock is trading above its primary moving averages, reinforcing a bullish outlook.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Speculative Buy’ recommendation has been given on Aurora Cannabis Inc (NASDAQ: ACB) at the closing market price of USD 5.23, as on August 25, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Healthcare Industry: Drug Manufacturers - Specialty & Generic
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| ACB Aurora Cannabis Inc |
0.08 1.43% | 5.61 | - | - | 0.84 | 0.64 | 1.23 | 96.78 |
| ZTS Zoetis Inc |
-0.39 0.32% | 122.84 | 40.18 | 30.96 | 10.67 | 17.60 | 11.27 | 26.18 |
| MKKGY Merck KGaA ADR |
-0.66 2.31% | 27.92 | 21.25 | 14.93 | 3.10 | 2.14 | 3.60 | 12.98 |
| MKGAF MERCK Kommanditgesellschaft auf Aktien |
- -% | 149.11 | 21.73 | 14.95 | 3.16 | 2.15 | 3.56 | 12.82 |
| TAK Takeda Pharmaceutical Co Ltd ADR |
-0.02 0.14% | 14.51 | 32.67 | 11.53 | 0.01 | 0.87 | 0.02 | 0.07 |
Data Powered by EOD Historical Data (“EODHD”).
Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and prevailing geopolitical tensions. Therefor it is prudent to follow a cautious approach while investing.
Related Risks: This report may be looked at from a high-risk perspective and recommendations are provided only for day trading purposes. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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