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Tilray (TLRY) to Report Q3 Earnings: What's in the Cards?

Zacks Equity Research

Tilray, Inc. TLRY is scheduled to release third-quarter 2019 results on Nov 12.

In the last reported quarter, the company missed earnings expectations by 39.13%. The track record has been pretty disappointing for this company, which went public in July 2018. In the last four quarters, the company missed earnings estimates thrice with average negative surprise of 27.85%.

Let us see what is in store for the third quarter.

Tilray, Inc. Price, Consensus and EPS Surprise

 

Tilray, Inc. Price, Consensus and EPS Surprise

Tilray, Inc. price-consensus-eps-surprise-chart | Tilray, Inc. Quote

 

Why a Likely Positive Surprise?

Our proven model predicts an earnings beat for Tilray this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP for Tilray is +2.18% as the Zacks Consensus Estimate is pegged at a loss of 29 cents while the Most Accurate Estimate is pegged at a loss of 28 cents.

Zacks Rank: It currently carries a Zacks Rank #3.

Factors at Play

Tilray produces medical cannabis in Canada and Europe. Revenues increased significantly year over year in the second quarter, driven by the Manitoba Harvest acquisition, the legalization of the Canadian adult-use market and growth in international medical markets, particularly in Europe.  This trend has most likely continued in the third quarter.

Notably, Tilray had acquired Manitoba Harvest, a hemp and natural foods producer in Winnipeg, Manitoba, in the first quarter.  Recreational cannabis was legalized in October 2018. This might have driven demand for the company’s products in the third quarter.

Gross margin was down year over year in the second quarter due to increased costs incurred with the ramping up of cultivation facilities in Canada and Portugal and acquisition of third-party supply. The same most likely prevailed in the third quarter.

Apart from the regular top and bottom-line numbers, investors will focus on the company’s collaboration deals to expand global footprint.

Tilray recently announced that it has successfully imported medical cannabis into the United States from Canada in support of a new clinical trial. The study will test the efficacy of medical cannabis in treating patients with breast cancer who are suffering from taxane-induced peripheral neuropathy secondary to treatment with paclitaxel or docetaxel.

In August, the company announced that it has entered a definitive agreement under which Tilray, through a wholly-owned subsidiary of High Park Holdings Ltd., will acquire all issued and outstanding securities of 420 Investments Ltd., an adult-use cannabis retail operator headquartered in Calgary, Alberta. In the same month, Tilray signed a $3.3-million(€3 million) initial supply agreement with Cannamedical Pharma GmbH to increase the distribution of medical cannabis products for German patients in need.

Share Price Performance

Tilray’s stock has slumped 67.5% in the year so far against the industry’s growth of 3.7%.

 

Other Stocks to Consider

Here are some other stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.

Amicus Therapeutics FOLD has an Earnings ESP of +3.98% and a Zacks Rank #2. The company is scheduled to release third-quarter results on Nov 11. You can see the complete list of today’s Zacks #1 Rank stocks here.

Eyenovia EYEN has an Earnings ESP of +10.51% and a Zacks Rank #2. The company is scheduled to release third-quarter results on Nov 13.

Canopy Growth Corporation CGC has an Earnings ESP of +11.85% and a Zacks Rank #3. It will release its financial results for the second quarter of fiscal 2020 on Nov 14.

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