Over the past 12 months, Aurora Cannabis Inc (NYSE: ACB) shares have fallen 61%.
The Aurora Analyst
Cantor’s Aurora Thesis
Aurora has no optionality from the entry of a consumer packaged goods investor or improved financial practices that a new CEO could impose, Zuanic said in a Thursday note. (See the analyst’s track record here.)
“We think it is time for Nelson Peltz, a well-known shareholder activist being paid as a consultant at ACB, to call for the same greater financial discipline at ACB that he advocated for at firms such as HNZ, PEP, and MDLZ (all NC).”
The recent departure of the company’s CCO Cam Battley is one development that indicates this could occur, the analyst said.
Aurora could have a fantastic 2020 if Mr. Peltz could also push for a CPG company to take a stake in the company, Zuanic said.
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The analyst doesn’t agree with the market’s analysis of Battley’s departure; he sees it as a positive that creates space for the company to “bring a David Klein-type CEO.”
Aurora’s valuation doesn’t mirror the optionality from a potential new CEO or CPG entry, he said.
If the company were to announce both new CEO and a CPG investment, “looking at WEED and CRON, we’d say ACB would at least double to 22x last quarter’s sales. Still, that said, for 12-month price target purposes, we have lowered our PT to C$5.00 from C$5.85, as we have lowered our sales projections.”
Cantor Fitzgerald projects that Aurora will end FY2020 with CA$744 million in net debt.
Aurora Price Action
Aurora shares were down 4.19% at $2.06 at the time of publication.
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