Tilray Earnings: Decent Performance in Cannabis and Alcohol

Key Morningstar Metrics for Tilray Brands

• Fair Value Estimate: $1.40
• Morningstar Rating: ★★
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: Very High

What We Thought of Tilray Brands’ Earnings

Tilray Brands TLRY reported that fiscal first-quarter 2026 net revenue increased 5% to $200 million. Cannabis revenue grew 5%, while sales of alcoholic beverages declined less than 1%. Adjusted EBITDA margin increased about 20 basis points to 4.9%.

Why it matters: Although Tilray continues to face market price compression in cannabis and weaker demand in alcohol, results were better than in recent quarters. Shares were up 22% as the market reacted enthusiastically.

• Canadian cannabis market prices declined 1.3% and volume increased 6.5%. Tilray outperformed, with 2% higher prices and volume growth ahead of the market, as it was the only licensed producer in the top five to grow its share.
• Flat beverage revenue was a decent result given the reduced number of craft beer products from the Project 420 savings initiative. Our preprint forecast for full-year revenue growth of 4% looks achievable.

The bottom line: We don’t expect major changes to our $1.40 per share fair value estimate for no-moat Tilray. Our forecast for fiscal 2026 revenue of $950 million and adjusted EBITDA of $67 million looks to be within reach, given strong results in the seasonally small quarter.

• Even before the rally, shares had more than tripled since the beginning of July, and we now think they are overvalued. Although we continue to believe Tilray is well-positioned for continued profit growth, we see market expectations as overly optimistic.
• We reiterate our Very High Uncertainty Rating, as cannabis is still a young and volatile industry, suggesting wide potential valuation outcomes. Specifically, timing on profit growth and regulatory progress is uncertain, with many factors outside of Tilray’s control.

Big picture: Management estimated a $300 million-$400 million revenue opportunity in US medical cannabis upon rescheduling. We’re skeptical of its claims that it can leverage its Canadian infrastructure, and as such, we think it would take an acquisition to capture any benefit.