Tilray Brands stock has remained under pressure and is underperforming the market this year. TLRY was trading at $4.15 after falling by 55% since January and by 62% in the last 12 months. Still, a contrarian case can be made despite its ongoing challenges.
Tilray Brands is doing fairly well despite challenges
The cannabis industry is going through a tough situation, with demand falling, competition rising, and the rescheduling taking longer than expected.
Tilray Brands’ business has been affected by these developments. Nonetheless, a closer look at its recent results shows that its business is doing relatively well.
The most recent results shows that its annual revenue rose by 11% to $915 million in the last financial year. It rose by 25% in the fourth quarter to $281 million, partly because of its acquisitions.
Its cannabis revenue rose by 5% to $71.5 million, with its gross margin remaining unchanged at 44%. The beverage business generated $105 million in revenue, up sharply from the $65.6 million it made last year. Also, its annual revenue rose by 6% to over $254 million.
The distribution revenue rose by 15% to $85 million, while the smaller wellness revenue rose by 16% to $19.7 million. These numbers mean that the company is seeing modest growth across the board, which the management has pledged to accelerate.
The company also narrowed its losses during the quarter. It reported a non-cash loss of $37.9 million, mostly because of non-cash charges.
Analysts are optimistic that Tilray Brands’ revenue will continue growing in the foreseeable future. The average estimate among analysts is that its annual revenue will rise by 22% to $1.12 billion. It will then hit $1.18 billion next year. In most cases, Tilray Brands tends to outperform its top-line numbers, meaning that its real figures will be better than expected.
Another potential catalyst is the rescheduling of cannabis. Tilray does not have cannabis operations in the US, meaning that it may enter the country once the rescheduling process ends. The company said:
“Following recent U.S. rescheduling developments, Tilray continues to evaluate multiple pathways to participation in an emerging federally compliant, science-driven medical cannabis market.”
Tilray stock price technical analysis
The daily chart shows that the TLRY stock has been in a strong sell-off since last year. It has formed a descending channel and remained below all moving average indicators.
The stock is hovering near the key support level of $3.69, which is part of a double-bottom pattern whose neckline is at $4.95. Therefore, the stock will likely retreat to the key support of $3.70 and then bounce back.
If this happens, the initial target will be at $4.95. A move above that level will point to more gains, potentially to $5. This view will remain as long as it is above the double-bottom of $3.70.