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How to Play Aurora Cannabis Stock Amid Renewed Legalization Hopes?
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Key Takeaways
Aurora's fiscal Q1 revenues rose 17% year over year to C$98 million, led by medical cannabis growth.
Medical cannabis sales climbed 37%, boosting adjusted EBITDA by 209% and free cash flow by 42% in Q1.
Weak recreational sales and heavy competition temper optimism despite stronger medical performance.
Shares of Aurora Cannabis (ACB - Free Report) have risen 21% year to date, outperforming the industry’s 5% rise, as seen in the chart below.
Image Source: Zacks Investment Research
In recent months, President Trump has spoken favorably about marijuana rescheduling — a move that sparked sharp rallies across several U.S.-listed cannabis stocks, including Aurora.
The stock’s price performance has left investors wondering whether to buy, hold or sell it. Let’s delve into the company’s fundamentals to gain a better understanding of how to play the stock amid this price surge.
ACB’s Medical Cannabis Biz Drives Top-line Growth
For first-quarter fiscal 2026 (year ended March 2026), Aurora’s total revenues rose 17% year over year and 8% sequentially to C$98 million. This growth was largely fueled by the encouraging sales performance of its medical cannabis, which was responsible for generating nearly two-thirds of this top line.
Sales of the company’s medical cannabis segment rose 37% year over year to nearly $65 million. This increase was primarily driven by increased revenues in Canada from insurance-covered and self-paying patients, as well as higher sales in international markets like Australia, Germany, Poland and the UK.
The higher sales also helped improve adjusted gross margin numbers for the medical cannabis segment, which climbed to an impressive 69% compared with 67% in the year-ago period. This improvement was driven by higher selling prices, sustainable cost reductions and enhanced production efficiencies. These higher margins have helped Aurora’s adjusted EBITDA to soar 209% year over year to around C$11 million and generate free cash flow of over C$9 million (up 42% year over year) in the first quarter.
Looking ahead, Aurora expects international medical cannabis sales to continue growing in the fiscal second quarter, supported by new product introductions and market expansion initiatives. The global medical cannabis market is projected to cross the $130 billion mark by the end of 2032, underlining Aurora’s strategic focus on this high-margin segment.
Declining Consumer Cannabis Sales Impact Growth
While medical cannabis continues to deliver robust growth, Aurora’s recreational segment remains a weak spot. Intensifying competition and price compression in Canada’s adult-use market have pressured revenues and margins, prompting Aurora to recalibrate its strategy toward higher-value opportunities.
Aurora now prioritizes the production and supply of GMP-certified medical cannabis products, which command higher margins and align better with its long-term strategy. The company’s growing focus on premium medical offerings, coupled with continued cost optimization, is expected to support stable earnings momentum in the coming quarters.
Other Players in the Cannabis Space
Aurora competes in an overcrowded market. It faces stiff competition from its peers, like Curaleaf Holdings (CURLF - Free Report) and Tilray Brands (TLRY - Free Report) , both of which are also pursuing international expansion and cost optimization strategies. As ACB gains ground in international markets, competitive responses from Curaleaf and Tilray could intensify.
With most Canadian and international cannabis producers chasing the same limited growth opportunities, the competitive landscape remains challenging and could cap Aurora’s ability to sustain outsized market share gains.
ACB Valuation Estimates
Loss per share estimates for 2025 and 2026 have remained unchanged in the last 30 days.
Image Source: Zacks Investment Research
How to Play ACB Stock?
Despite encouraging trends in Aurora’s medical cannabis division, its overall fundamentals still point to a challenging road ahead. Persistent weakness in the recreational segment and a crowded competitive landscape continue to weigh on the company’s path to profitability. Though the company’s cash flow is improving, it remains modest relative to ongoing investment needs.
Though listed in the United States, ACB has minimal operating presence in the market, limiting its ability to benefit directly from potential federal reform. The stock currently has a Zacks Rank #4 (Sell), indicating limited upside and elevated risk for conservative investors.
Image: Bigstock
How to Play Aurora Cannabis Stock Amid Renewed Legalization Hopes?
Key Takeaways
Shares of Aurora Cannabis (ACB - Free Report) have risen 21% year to date, outperforming the industry’s 5% rise, as seen in the chart below.
Image Source: Zacks Investment Research
In recent months, President Trump has spoken favorably about marijuana rescheduling — a move that sparked sharp rallies across several U.S.-listed cannabis stocks, including Aurora.
The stock’s price performance has left investors wondering whether to buy, hold or sell it. Let’s delve into the company’s fundamentals to gain a better understanding of how to play the stock amid this price surge.
ACB’s Medical Cannabis Biz Drives Top-line Growth
For first-quarter fiscal 2026 (year ended March 2026), Aurora’s total revenues rose 17% year over year and 8% sequentially to C$98 million. This growth was largely fueled by the encouraging sales performance of its medical cannabis, which was responsible for generating nearly two-thirds of this top line.
Sales of the company’s medical cannabis segment rose 37% year over year to nearly $65 million. This increase was primarily driven by increased revenues in Canada from insurance-covered and self-paying patients, as well as higher sales in international markets like Australia, Germany, Poland and the UK.
The higher sales also helped improve adjusted gross margin numbers for the medical cannabis segment, which climbed to an impressive 69% compared with 67% in the year-ago period. This improvement was driven by higher selling prices, sustainable cost reductions and enhanced production efficiencies. These higher margins have helped Aurora’s adjusted EBITDA to soar 209% year over year to around C$11 million and generate free cash flow of over C$9 million (up 42% year over year) in the first quarter.
Looking ahead, Aurora expects international medical cannabis sales to continue growing in the fiscal second quarter, supported by new product introductions and market expansion initiatives. The global medical cannabis market is projected to cross the $130 billion mark by the end of 2032, underlining Aurora’s strategic focus on this high-margin segment.
Declining Consumer Cannabis Sales Impact Growth
While medical cannabis continues to deliver robust growth, Aurora’s recreational segment remains a weak spot. Intensifying competition and price compression in Canada’s adult-use market have pressured revenues and margins, prompting Aurora to recalibrate its strategy toward higher-value opportunities.
Aurora now prioritizes the production and supply of GMP-certified medical cannabis products, which command higher margins and align better with its long-term strategy. The company’s growing focus on premium medical offerings, coupled with continued cost optimization, is expected to support stable earnings momentum in the coming quarters.
Other Players in the Cannabis Space
Aurora competes in an overcrowded market. It faces stiff competition from its peers, like Curaleaf Holdings (CURLF - Free Report) and Tilray Brands (TLRY - Free Report) , both of which are also pursuing international expansion and cost optimization strategies. As ACB gains ground in international markets, competitive responses from Curaleaf and Tilray could intensify.
With most Canadian and international cannabis producers chasing the same limited growth opportunities, the competitive landscape remains challenging and could cap Aurora’s ability to sustain outsized market share gains.
ACB Valuation Estimates
Loss per share estimates for 2025 and 2026 have remained unchanged in the last 30 days.
Image Source: Zacks Investment Research
How to Play ACB Stock?
Despite encouraging trends in Aurora’s medical cannabis division, its overall fundamentals still point to a challenging road ahead. Persistent weakness in the recreational segment and a crowded competitive landscape continue to weigh on the company’s path to profitability. Though the company’s cash flow is improving, it remains modest relative to ongoing investment needs.
Though listed in the United States, ACB has minimal operating presence in the market, limiting its ability to benefit directly from potential federal reform. The stock currently has a Zacks Rank #4 (Sell), indicating limited upside and elevated risk for conservative investors.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.