CAN: Aurora may not see profit for next three years, analysts say

Aurora Cannabis could be three years away from sustainable profit, according to BMO Capital Markets. Analysts see the company drifting past the latest timeline given to investors unless they see more meaningful cost cuts.

Edmonton-based Aurora’s latest bid to improve its financial performance centres on selling more higher-priced cannabis products with wider margins. The premium push bucks an industry trend of offering value-priced pot to compete against the still sizeable illicit market.

Aurora, now under the leadership of new CEO Miguel Martin, is targeting the second quarter of fiscal 2021 to achieve positive adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization). The company has missed two previous profitability targets.

“If Aurora does not endeavour further meaningful [selling, general and administrative expense] cuts, we believe the timeline to achieve the sales volumes that would break even at EBITDA is three years away,” BMO analysts Tamy Chen and Peter Sklar wrote in a note to clients late Monday. “This assumes Aurora can achieve the premium mix in our analysis, which requires a substantial increase from today.”