Piper Sandler has reaffirmed a Neutral rating and a $2.00 price target for Tilray (NASDAQ: NASDAQ:TLRY). The firm's stance comes after Tilray reported first-quarter fiscal year 2025 revenues of $200.0 million, which fell short of Piper Sandler's $229.0 million projection.
The company's adjusted EBITDA for the quarter was $9.3 million, also below the expected $13.7 million.
Tilray's revenue for the first quarter marked a roughly 13% sequential decline. Despite this, the company maintains its fiscal year 2025 sales forecast between $950 million and $1 billion, which includes contributions from mergers and acquisitions.
Piper Sandler cited several factors for the revenue shortfall, including increased price compression in the Canadian adult-use market and slowing momentum in international markets, with the exception of Germany.
The analysis by Piper Sandler suggests that while Tilray may see improvements in gross margin within its Beverage Alcohol segment due to repatriated production, overall sales trends present challenges. The firm has reduced its fiscal year 2025 sales estimate for Tilray from approximately $915 million to around $875 million and the fiscal year 2026 sales forecast from $970 million to $920 million. However, the price target remains unchanged at $2.00.
In other recent news, Tilray Brands, Inc. reported a mixed set of results for its first quarter ending August 31, 2024. The company exceeded earnings expectations but fell short of projected revenue, with an adjusted earnings per share of -$0.01, better than the -$0.04 analyst estimates.
However, revenue was $200 million, below the consensus forecast of $218.88 million. Jefferies maintained a positive stance on Tilray, reaffirming a Buy rating and acknowledging a mixed financial quarter. While the cannabis segment saw a 13% decline, the beverage alcohol sector experienced considerable growth of 132%, albeit below the expected 179% growth.
Tilray's gross margin percentage expanded by 207 basis points, a positive development attributed to a better product mix and reduced costs. Despite the mixed results, the company's financial guidance for fiscal year 2025 remains unchanged, with expected revenues between $950 million and $1 billion.
InvestingPro Insights
Recent data from InvestingPro offers additional context to Tilray's financial situation. Despite the revenue shortfall noted in Piper Sandler's analysis, InvestingPro data shows that Tilray's revenue growth stands at 25.8% over the last twelve months as of Q4 2024, with quarterly revenue growth at 24.81%. This growth, while not meeting analyst expectations, still indicates a positive trajectory.
InvestingPro Tips highlight that Tilray's stock price movements are quite volatile, which aligns with the challenges and regulatory uncertainties mentioned in the article. Additionally, the tip that "Net income is expected to grow this year" provides a counterpoint to the current profitability concerns, suggesting potential improvement on the horizon.
It's worth noting that Tilray operates with a moderate level of debt and its liquid assets exceed short-term obligations, which could provide some financial stability as the company navigates market challenges. For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for Tilray, providing a deeper understanding of the company's financial health and market position.
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