Aurora Cannabis Inc. shares gained in late trading Thursday, after the Canadian pot producer beat sales expectations for the first time in more than a year.
reported a fiscal second-quarter loss of C$75.1 million ($59 million), improving from a loss of more than C$300 million a year ago, on net revenue of C$60.6 million in the quarter, down from C$67.7 million a year ago.
Analysts on average expected a loss of C$45.4 million on sales of $C59.1 million, according to FactSet; Aurora had missed the sales consensus in four consecutive quarters and eight of the past 10. Aurora’s U.S.-listed shares gained more than 6% in after-hours trading following the release of the results, after closing with a 1.1% loss in the regular session at $4.59.
Aurora’s recent revenue misses were part of a yearslong decline for a popular stock pick in the boomtimes of Canada’s move into legal recreational cannabis, the first major industrialized nation to legalize the drug in such a manner. Aurora has struggled amid an executive shake-up, reverse stock split and hefty losses, with shares losing nearly 95% of their value in the past three years, including a 75% decline in the past 12 months.
The current management team is hoping to show an improving bottom line to investors by focusing more on high-margin medical cannabis than the Canadian recreational market, which has trended toward cheaper pot. Aurora disclosed Tuesday that medical cannabis revenue increased 18% year-over-year to C$45.75 million, while recreational sales declined 48% to C$14.8 million, and executives said international medical sales grew 67% from last year and 24% sequentially.
“New international markets are rapidly opening, and with the unique ability to navigate complex regulatory environments, we see a significant revenue opportunity of which we are at the forefront,” Chief Executive Miguel Martin said in a statement. “While the Canadian adult-use market continues to face challenges, we are focused on introducing a new range of products set to launch this spring.”
While Aurora tries to capitalize on its shift toward medical pot, MKM Research analyst Bill Kirk wrote in a preview of Aurora and Canopy Growth Corp.
results that the Canadian recreational market remains a problem for pot producers.
“Generally speaking, the largest manufacturers are having difficulty meeting Canadian recreational consumer needs either via an inability to grow the right product or a lack of understanding what the consumer wants,” Kirk, who has a neutral rating on Aurora shares with a fair-value estimate of C$6 a share, wrote earlier this week. “In part, Aurora Cannabis has already pivoted away from this consumer problem.”
Canopy Growth seemed to break away from doubts with a stronger-than-expected report Wednesday morning, which boosted pot stocks including Aurora.