Steady Gross Margin and Cost Management in Tilray’s Q1; Shares Attractive as Positive FCF Nears

Tilray’s first-quarter fiscal 2023 result continued its now 14-quarter long streak of positive adjusted EBITDA. With our long-term forecast largely remaining intact, we maintain our $12 U.S. dollar-denominated fair value estimate for no-moat Tilray. Our Canadian dollar-denominated fair value estimate rises to CAD 16 per share from CAD 15 on the stronger U.S. dollar. While Tilray shares soared in response to President Biden’s move to pardon federal marijuana possession offenses, Tilray continues to screen as deeply undervalued. Trading in 5-star territory, we view the current share price as an attractive entry point as the Canadian licensed producer closes in on sustainable positive free cash flow generation.