Canada-based Aurora Cannabis has entered into a supply agreement with Cantek Holdings, one of the leading medical cannabis companies in Israel.
Under the terms of the agreement, Aurora Cannabis (ACB) will supply dried bulk flower to Cantek over a two-year period, with the option to extend the deal. The company intends to provide Cantek with at least 4,000 kgs of bulk dried flower annually. The finished product processed from the dried flower will be co-branded under the Aurora and Cantek brands for the Israeli market with the potential for additional international market sales.
Aurora Cannabis stated that it made the initial shipment of cannabis during the week of Nov. 16, 2020, after securing all necessary export and import permits. With this deal, the company now has a presence in two of the largest legal medical cannabis markets outside of Canada – Germany and Israel. (See ACB stock analysis on TipRanks)
Commenting on the deal, Aurora Cannabis’ CEO Miguel Martin stated, “We are excited about our strategic relationship with Cantek, a leader in the Israeli market. This agreement provides Aurora with a great opportunity to expand our medical cannabis brand and industry leading science in one of our key international markets of focus.”
Shares of Aurora Cannabis have declined 66.4% this year as the company reported mounting losses. The average price target of $7.45 indicates downside potential of 14.5% from current levels. The Street has a Hold analyst consensus on the stock based on 12 Holds and 3 Sells.
Recently, Stifel analyst W. Andrew Carter downgraded ACB to Sell from Hold but raised the price target to C$6.50 from C$3.50 based on valuation. The analyst stated “third-quarter 2020 results [suggest] a sense of urgency with respect to cash needs.”
“We do not believe the company has demonstrated an enduring right-to-win for new market opportunities, particularly in the U.S., with the increasing competitiveness of the Canadian market challenging the company’s ability to achieve profitability while contending with liquidity issues,” Carter summed up.