Shares of Auxly Cannabis Group Inc. (CBWTF) declined 7.7% on Monday after the company reported wider-than-expected loss for the first quarter of 2022.
Quarterly loss of $0.05 per share lagged the consensus loss estimate of $0.02 per share. The company had posted a loss of $0.01 per share in the same quarter last year.
Auxly engages in investment, and financial and banking solutions. It focuses on equity and debt investments in private and public companies in various industries, including the cannabis industry.
Net revenues of $22.6 million more than doubled from $9.2 million in the same quarter last year.
The company posted adjusted EBITDA of negative $5.6 million during the quarter, compared to a negative $6.5 million a year ago, as improved gross profits were offset by elevated selling, general and administrative expenses.
Plans for 2022
Auxly expects to achieve positive adjusted EBITDA for full-year 2022 by investing in automation. The move is expected to help the company increase its revenues, widen distribution and reduce costs. Also, it seeks to deliver new and innovative branded products to the market to enhance customer satisfaction.
Price Target
Overall, the Street is bullish on the stock and has a Strong Buy consensus rating based on three unanimous Buys. Auxly’s average price forecast of $0.26 implies upside potential of about 114.2% from current levels.
Conclusion
Despite the earnings miss, the company performed decently in the first quarter, as its revenues surged significantly. Also, Auxly’s efforts to innovate new products, improve its brand name and control costs reflect its potential for long-term growth.
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