The Aurora Cannabis stock forecast (ACB) is looking uncertain. In the three months to 30 June, total net revenue at the Canadian cannabis company fell 20% compared with the same period a year earlier, down to CAD54.8m ($43.1m). While medicinal sales have risen by 9% over the past 12 months, this has not been enough to offset a 45% decline in the consumer-facing side of the business.

Despite the gloomy results, the ACB stock price actually rose in the immediate aftermath of the results announcement. One day later, on 28 September, shares leapt up from $6.29 to $6.73 in the first two hours of trading, an increase of 7%. 

On a call with analysts, Aurora’s CEO, Miguel Martin, said: “I can safely say we're in the best shape the company has ever been in.” So… is the Aurora Cannabis stock forecast divorced from current financials?

Martin painted a picture of a company tightening its belt and reducing cash burn by making cost savings wherever possible. He also pointed out that medicinal cannabis tends to deliver a much higher margin of 60%, close to double what is achieved through recreational sales.

“Given ongoing challenges in the Canadian adult recreational market, our broad diversification across domestic medical, international medical, and adult recreational segments provides us with underlying strength, stability, and growth opportunities in an evolving industry for global cannabinoids,” he said in a statement accompanying the results.

Debt levels are reducing, and Aurora Cannabis currently has a war chest of CAD1bn. Investment in research and development is also set to be monetised. Overall, Martin expressed confidence that the company will see revenue growth in 2022, something that will factor heavily in ACB stock predictions.

ACB stock forecast: untapped markets

During the earnings call, Martin’s argument was that Aurora Cannabis is a market leader in a nascent industry. He pointed to figures that suggest the company currently has a 20% share of Canada’s medicinal marijuana industry, approximately double that of the next biggest competitor. Just 1% of the population currently use the drug for health reasons, however.

“This gap represents Aurora’s opportunity to expand our presence and we have done so through significant investment to help doctors and patients fully appreciate the benefits of medical cannabis. That outreach includes education,” Martin said.

Other elements of Aurora’s strategy include cutting waiting times, enhancing customer service, and rolling out a greater range of products for patients. 

But should the slowdown in consumer demand be a cause for concern? Martin thinks not. Although the year-on-year comparisons for sales in Canada are far from flattering, he told analysts that growth of 8% was achieved on a quarter-to-quarter basis. A newfound focus on higher-quality and higher-potency products appears to be helping matters.

Martin said: “We believe the adult recreation segment is in the process of bottoming out and is now poised to rebound, given new store openings and rising consumer demand.”

Another factor that may help Aurora Cannabis predictions for 2021 lies in how the company is now anticipating that it will be EBITDA (earnings before interest, taxes, depreciation and amortisation) positive on an adjusted basis by the first half of the next fiscal year, even if revenues failed to rise from where they were in the most recent quarter.

ACB’s stock price has lost ground in the year-to-date. It began the year trading at $9.52. That means the price of $6.83 seen at the time of writing is a 28.2% discount on these levels. It is also some way off the 2021 highs of $18.98 that were seen in the middle of February. ACB’s share price has also traded below $100 for more than two years now.

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