Tilray (TLRY) is a Canadian cannabis and packaged consumer goods company. It operates in several countries, including the U.S., Germany, and Australia. The company recently reported its financial results for the Fiscal 2021 fourth quarter and full-year. Let’s take a look at Tilray’s financial performance and risk factors.
Tilray’s Financial Results
Tilray released its financial results on July 27. It reported revenue of $513 million for the full year Fiscal 2021 ended May 31, representing an increase of 27% from the previous year. The revenue increase was driven by a 55% rise in cannabis sales.
Net loss for the year amounted to $336 million, compared to a $100.8 million loss in the previous year. Tilray’s management attributed the widening of the full-year loss to high transaction costs related to its merger with Aphria.
For the fiscal fourth quarter, revenue increased 25% year-over-year to $142.2 million. It made a profit of $33.6 million, compared to a loss of $84.3 million in the same period last year.
Tilray CEO Irwin Simon commented, “In a very short period of time since our business combination was finalized, we transformed and strengthened Tilray, delivered solid results amid continued COVID-19 lockdowns and restrictions and achieved $35 million in synergies to date – well on our way to delivering $80 million in cost savings over the next 16 months.” (See Tilray stock charts on TipRanks).
Tilray’s Risk Factors
According to the new Tipranks Risk Factors tool, a total of 80 risk factors have been identified for Tilray. The primary risk category is Finance and Corporate, accounting for 33% of the total risks. Legal and Regulatory and Production are the next two major risk categories at 23% and 16%, respectively.
Since May 2021, Tilray has revised its risk profile to remove 15 risks and add 15 new risk factors. Tilray dropped a Legal and Regulatory risk factor that had warned that regulations related to the adult-use cannabis industry in Canada could affect its ability to compete successfully.
A newly added Finance and Corporate risk factor cautions that there may be difficulties integrating Tilray and Aphria operations and achieving the expected benefits of the merger.
Another new Finance and Corporate risk factor that investors should take note of warns about the high costs of maintaining a dual listing of Tilray stock on TSX and NASDAQ. The company further notes that the dual listing may increase the volatility of its stock price.
The Finance and Corporate risk factor’s sector average is 39%, compared to Tilray’s 33%. TLRY shares have gained about 87% since the beginning of 2021.
Analysts’ Take
After Tilray reported its latest financial results, Roth Capital analyst Scott Fortune reiterated a Hold rating on the stock and price target of $25. Fortune’s price target suggests 65% upside potential.
The analyst observed that Tilray’s results beat on the profitability side despite revenue falling short of expectations. Fortune also noted that the company achieved $35 million in cost synergies. Moreover, Tilray has $488 million in cash and Fortune believes the company is evaluating U.S. opportunities in both the cannabis and consumer packaged goods categories.
Consensus among analysts is a Moderate Buy based on 5 Buys and 5 Holds. The average Tilray price target of $19.56 implies 29.8% upside potential to current levels.
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