Tilray Earnings: Slower Fiscal Period Than We Expected, but Second Half of Year Should Be Better

Based on our initial review of no-moat Tilray’s fiscal second-quarter results, we expect to trim our full-year revenue forecast by a mid-single-digit percentage. This is mostly due to slightly slower cannabis revenue growth than we expected as Canada remains overcrowded with licensed producers. This should lead to a mid-single-digit percentage reduction in our fair value estimates of $3.30 and CAD 4.50 per share. As reflected in our Very High Uncertainty rating for the company, changes to our forecasts can have dramatic effects on our fair value estimates. Tilray has yet to achieve positive free cash flow and the potential for equity dilution to fund cash burn underpins the risk that drives our uncertainty rating.