After years of poor stock performance, inconsistent business momentum and an uncertain regulatory framework, cannabis stocks are finally beginning to show some signs of life.

The industry's fundamental backdrop is still far from perfect. But regulatory conditions are gradually improving, several operators are demonstrating better profitability, and investor interest is beginning to return after years of relentless selling.

One stock beginning to stand out is Aurora Cannabis ((ACB Quick QuoteACB - Free Report) ).

Aurora has spent years restructuring its business after the excesses of the first cannabis boom, but the company today looks considerably different. Management has increasingly focused the business around higher-margin global medical cannabis, while exiting lower-return operations and expanding its presence across Europe.

More importantly for investors, analysts are beginning to recognize the improvement. Earnings estimates are moving sharply higher, ACB has climbed to a Zacks Rank #1 (Strong Buy), and the stock's technical picture is beginning to strengthen as well.

Image Source: Zacks Investment Research

Cannabis Stocks Finally Have Some Catalysts

The regulatory backdrop remains one of the biggest potential catalysts for the cannabis industry.

Federal policy has moved toward less restrictive treatment of medical cannabis. Following an executive order in December 2025, the Justice Department issued a final order in April moving certain FDA-approved and state-licensed medical marijuana into Schedule III treatment. The broader regulatory picture remains unsettled, however, with legal challenges and administrative proceedings still ongoing.

The financial implications could be significant.

Section 280E of the tax code prevents businesses trafficking in Schedule I or Schedule II substances from deducting many normal operating expenses. Moving qualifying cannabis activity to Schedule III therefore has the potential to substantially lower effective tax burdens and improve cash flow for affected US cannabis operators.

Aurora itself has limited direct exposure to the US market, so investors shouldn't view 280E relief as a direct earnings catalyst for ACB. Instead, the regulatory shift matters primarily because it improves the broader environment for cannabis stocks and could ultimately accelerate momentum in an industry that has spent years operating under unusually restrictive conditions.

Aurora's company-specific opportunity is elsewhere: international medical cannabis.

The company has established significant positions across Canada, Germany, Poland, Australia and New Zealand and is concentrating capital on markets where medical cannabis economics are substantially more attractive than the highly competitive recreational market.

That focus is beginning to show through in the numbers.

Earnings Estimates Turn Higher for Aurora Cannabis

Aurora's most recent quarter was somewhat mixed on the surface, but there were several encouraging developments beneath the headline numbers.

Fiscal first quarter revenue declined yeor-over-year as Aurora continued winding down its consumer cannabis operations and dealt with lower reimbursement rates in Canadian medical cannabis. Internationally, however, the picture was considerably stronger.

International medical cannabis revenue increased 17% year over year, driven primarily by growing patient demand in Germany. Medical cannabis represented the vast majority of t revenue in the quarter, illustrating just how dramatically the business has shifted toward its core medical franchise.

And Aurora continues to invest behind that opportunity.

The company's acquisition of Safari Flower Company added EU-GMP-certified production capacity, while Aurora is also expanding in the United Kingdom. Management recently reaffirmed expectations for sequential growth in both revenue and adjusted EBITDA during the fiscal second quarter, citing continued strength in Germany and Poland. Aurora also finished June with roughly C$149 million in cash and short-term investments and no debt.

Furthermore, markets trade on the direction of future earnings rather than past results, and this is where the Aurora story is becoming most interesting.

Earnings estimates have moved sharply higher in recent weeks. Most notably, next year estimates have flipped from a projected loss to a profit over the past 60 days.

That rapid improvement in analyst expectations is exactly what has pushed Aurora into a Zacks Rank #1 (Strong Buy).

Image Source: Zacks Investment Research

The company has also now exceeded Zacks consensus EPS estimates in each of its last four quarters. Most recently, Aurora reported adjusted earnings of $0.04 per share versus expectations for a $0.13 loss, representing another substantial positive surprise.

There is another interesting validation of Aurora's assets as well.

Curaleaf Holdings recently launched an unsolicited takeover offer for the company. The proposal initially implied consideration of roughly $4 per Aurora share, consisting of cash and Curaleaf stock. Aurora's board has pushed back against the offer, but the bid nevertheless highlights the strategic value that a larger industry player sees in Aurora's international medical cannabis footprint.

ACB Shares Show Accelerating Momentum

The technical picture has also improved.

Aurora shares were hammered earlier this year, extending what has been a brutal multi-year period for long-term shareholders. But after falling toward the high-$2 range during the summer, the stock appears to have established a meaningful base.

Momentum has subsequently turned higher. Just this week, ACB shares have pushed to new multi-month highs and are approaching YTD highs.

Image Source: TradingView

Should Investors Buy Shares in ACB?

Aurora Cannabis remains a speculative stock in an industry with a long history of disappointing investors.

There are legitimate risks. The company's Canadian business remains under pressure, adjusted EBITDA declined sharply last quarter, the regulatory landscape remains complicated and the ongoing Curaleaf takeover battle adds another element of uncertainty.

But the setup is improving.

Aurora has shifted its focus toward higher-margin international medical cannabis markets, international revenue is growing at a double-digit pace, management expects sequential improvement in the current quarter and the balance sheet carries substantial cash with no debt. Most importantly from a Zacks perspective, analysts have begun raising their earnings expectations.

Meanwhile, the stock is beginning to confirm that improving outlook, with shares building momentum following a long period of weakness.

Cannabis stocks have generated plenty of false starts over the years. But with the industry backdrop improving and Aurora's earnings outlook turning higher at the same time its stock emerges from a long base, ACB may finally be offering investors a more compelling risk-reward setup.