• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

Tilray Stock Lights Up as Partnerships Obscure Profitability Problem

The move was helped by the TLRY's deals with AB InBev for beverages and Novartis for medical applications.
By KEVIN CURRAN Mar 19, 2019 | 08:56 AM EDT
Stocks quotes in this article: TLRY, BUD, NVS, CRON, STZ, CGC, MO, TWLO

Tilray (TLRY) stock was higher in pre-market trading Tuesday after a better than expected sales report and a focus on partnerships from management.

The move was helped by the prominence of the company's partnerships with beer giant AB InBev (BUD) for beverages and pharmaceutical giant Novartis (NVS) for medical applications. The commentary largely overshadowed a big miss on earnings per share for the fourth quarter that came in at a loss of $0.33 per share.

"We are still in the early stages of the global transformation of $150 billion worldwide industry," Tilray CEO Brendan Kennedy told investors. "We believe that over the long-term companies such as Tilray with the portfolio of trusted brands powered by multinational supply chain, will win the market by earning the confidence of patients, consumers and governments around the world."

Kennedy noted that Tilray is well positioned to lead the transition based on its partner with "established distributors and retailers to scale distribution of our products further and faster" to a global audience that could help justify the company's hefty market cap for a company with its sales figures.

"In the next year, we anticipate distributing medical cannabis to at least a half a dozen more countries globally through a partnership with Sandoz," Kennedy told analysts. "We also formed a strategic partnership with AB InBev to research non-alcohol beverages containing THC and CBD. The 50-50 joint venture combines AB InBev's deep experience in beverages with our expertise in cannabis products. And each company intends to invest up to $50 million for a total of up to $100 million."

Piper Jaffray analyst Michael Lavery keyed in on these prominent partnerships as the main rationale for his "Overweight" rating on the stock.

"We expect strong industry growth long-term, and we believe Tilray is well positioned to be one of several likely winners, especially given its relationships in medical (Novartis), in the US (Privateer Holdings), and in beverages (AB InBev)," he commented on Tuesday morning.

Lavery set a $90 price target for the stock, suggesting a strong runway ahead for the stock, supported by its high profile partners.

Still, the partnerships that the company touts pale in comparison to its competitors like Canopy Growth Corporation's (CGC) which inked a $4 billion deal with Constellation Brands (STZ)  , or Cronos Group (CRON) which received a $1.8 billion check from tobacco titan Altria (MO) .

Additionally, the revenue and profitability problems that the company is carrying makes its market cap a difficult one to justify, even among pot stocks so prone to high valuations.

$TLRY This says everything that you need to know. I challenge anyone to show me a single ounce being sold in the largest Ontario market? pic.twitter.com/1mghgnZ1yG

— Steve Patterson (@StevePTrading) March 18, 2019

For a point of reference, Twilio (TWLO) commands about a market cap just over two times that of Tilray. The two companies are a pertinent comparison as the addressable market in cloud communications is as attractive, if not more attractive, than that available in the nascent cannabis market.

While Twilio is often criticized for its lofty valuation, the company has shown an ability to report profitability in its quarterly results. Tilray has not done this yet. Additionally, Twilio reported over $200 million in revenue in its last quarterly report, with a target set at $1 billion in revenue for the fiscal year 2019. Tilray reported just over $15 million in revenue in the fourth quarter while eschewing guidance.

Pre-market trading appeared to pinpoint partnerships as its main area of focus, clouding the view of the issues in profitability.

It will remain to be seen how long that smokescreen can be sustained as the company continues to compete with companies that command larger cash piles from their own partners.

Will You Have Enough Money to Retire?

Want to learn about retirement planning from some of the nation's top experts? Join TheStreet's Robert "Mr. Retirement" Powell live in New York on April 6 for our Retirement Strategies Symposium. For a limited time, tickets are available for $99 for this full-day event. Check out the agenda, learn about the speakers and sign up here.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees of TheStreet are restricted from trading individual securities.

TAGS: Mergers and Acquisitions | Investing | Stocks | Trading | Food & Drink | Canada | Analyst Actions | Cannabis | Stock of the Day

More from Stocks

Centene Charts Remain Weak and Vulnerable

Bruce Kamich
Mar 3, 2021 1:35 PM EST

Let's review the charts and indicators.

An Update on the Weakening Trade Desk Charts

Bruce Kamich
Mar 3, 2021 12:55 PM EST

We're in no rush to be a buyer.

Get Some Dividend Insurance With This Stock

Bob Ciura
Mar 3, 2021 12:23 PM EST

Mercury General offers a 4.2% yield and growth promise, as it offers insurance in 11 states including California.

Stopped Out on Johnson & Johnson but Willing to Buy it Lower

Bruce Kamich
Mar 3, 2021 12:20 PM EST

Stand aside for now.

Public Service Enterprise Group Stock: Wind at Its Back or Off the Grid?

Bruce Kamich
Mar 3, 2021 11:45 AM EST

Let's check out the charts of the N.J.-based utility.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 08:50 AM EST PAUL PRICE

    Michaels: Close to a Deal?

    It appears that a deal could be announced soon. ...
  • 08:34 AM EST GARY BERMAN

    Wednesday Morning Fibocall for 3/3/2021

    SPX (Long-Term View) The 20 DMA @ 3889 with the ...
  • 06:05 PM EST PAUL PRICE

    Michael's (MIK) Up on Takeover Rumors

    The NYT says talks are underway regarding a buyout...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login