Aurora Cannabis Inc. (ACB) shares rose more than 8% during Tuesday's session after the company reported preliminary fourth quarter and full-year revenue estimates.
Fourth quarter revenue is projected to be between $100 million and $107 million, which is sharply higher than last year's $19.1 million but lower than some analyst expectations. Cannabis production for sale during the quarter will be between 25,000 and 30,000 kilograms, which is higher than previous guidance of 25,000 kilograms. Full-year revenue is expected to range from $249 million to $256 million.
Management cited growth across all key business segments, including medical and consumer markets in Canada and around the world, as driving these better-than-expected growth rates. The company expects to post positive adjusted EBITDA along with improvements in gross margins, kilograms of cannabis sold, and cash costs per gram produced. The guidance helped reassure investors that have been concerned over profitability.
Canada's cannabis industry has suffered over the past few months as the start of adult-use hadn't produced consistent results across licensed producers. Many revenue and net income figures have also lagged behind original expectations.
From a technical standpoint, the stock briefly broke out from trendline resistance to reach the 50-day moving average at around $7.25 before giving up ground. The relative strength index (RSI) moved toward neutral levels with a reading of 49.26, while the moving average convergence divergence (MACD) experienced the start of a bullish crossover. These indicators suggest that the stock could see more upside ahead.
Traders should watch for a breakout from trendline resistance and the 50- and 200-day moving averages at around $7.25. A breakout from these levels could lead to a move toward reaction highs of around $8.00 over the intermediate term. If the stock breaks back down into its price channel, traders could see a move lower to retest its lows before the stock makes another attempt higher over the coming sessions.
The author holds no position in the stock(s) mentioned except through passively managed index funds.