Aurora Cannabis Inc. (ACB) shares fell nearly 10% during Thursday's session after the company reported lower-than-expected fourth quarter financial results. Revenue rose 418% to nearly C$100 million, missing consensus forecasts by C$4.6 million, while production costs fell 20% to C$1.14 per gram, helping gross margins reach 58%. EBITDA losses came in at C$11.7 million versus C$36.6 million last quarter.
Stifel analyst W. Andrew Carter believes that investment demands and convertible debt coming due during the first quarter of 2020 will force the company to come to the market with a "significant ask" for funding. The elevated financing risk could continue to weigh on the stock over the coming months, which led the analyst to maintain his Hold rating. Other analysts have yet to weigh in on the results.
Over the long term, CEO Terry Booth says that the company is working to extend its reach into the U.S. market, which is seen as a key area of growth for Canadian firms. The company partnered with the UFC to explore CBD-from-hemp and hemp food products, while it continues to explore additional opportunities in conjunction with its strategic advisor.
From a technical standpoint, the stock rebounded lower from its 50-day moving average at $6.38 following the financial results. The relative strength index (RSI) fell to neutral levels of 47.19, but the moving average convergence divergence (MACD) remains in a modest uptrend toward the zero line. These indicators suggest that there's still a lot of indecision in the market following the stock's decline over several months.
Traders should watch for some consolidation above reaction lows of around $5.50 over the coming sessions. If the stock breaks down from those levels, it could retest 52-week lows from late last year of around $4.58 per share. If the stock rebounds higher, traders should watch for a move toward the 200-day moving average at $7.24 per share.
The author holds no position in the stock(s) mentioned except through passively managed index funds.