Earnings Previews: Aurora Cannabis, Toast

Shares of Canada-based pot grower Aurora Cannabis Inc. (NASDAQ: ACB) posted their 52-week high exactly one year ago. Since then, the shares have dropped by nearly 83%. Like its peers, the Edmonton, Alberta-based marijuana grower has been struggling to survive until the U.S. Congress takes action to legalize marijuana. That would remove cannabis from its current position as a dangerous drug and could pump up sales again. Unlike its peers, the company is a serial acquirer. The jury is still out on whether that is a reasonable strategy.

Of 13 analysts covering the stock, 11 have a Hold rating and two rate the shares at Buy or Strong Buy. At a recent price of around $1.30 a share, the implied gain based on a median price target of $1.49 is about 14.6%. Based on the high price target of $3.72, the upside potential for the stock is 186%.

Analysts expect Aurora to report fiscal first-quarter revenue of $40.1 million, which would be up by about 2.8% sequentially but down by 15.5% year over year. The company is expected to report an adjusted loss per share of $0.11, compared to the prior quarter’s loss of $0.16 per share and the year-ago loss per share of $0.19. For the full 2023 fiscal year ending in June, Aurora is expected to post a loss per share of $0.33, smaller than last year’s loss of $0.56 per share, on revenue of $181.19 million, up by about 5.4%.

Aurora is not expected to post a profit in 2023, 2024 or 2024. The enterprise value to sales multiple is expected to be 1.5 in 2023. Based on average estimated sales of $192.83 million and $204.1 million for 2024 and 2025, respectively, the multiple is 1.4 for 2024 and 1.3 for 2025. The stock’s 52-week trading range is $0.98 to $8.69. The company does not pay a dividend. Total shareholder return for the past year was negative 82.6%.

Toast

Since coming public in late September of last year, Toast Inc. (NYSE: TOST) has seen its share price sink by more than 69%. The company operates a cloud-based and digital technology platform for the U.S. and Irish restaurant industries. Since putting up its post-IPO low in mid-May, shares have added about 32%.

When Toast reported better-than-expected second-quarter results in August, it raised full-year guidance. That was a repeat of Toast’s guidance boost after it reported first-quarter results. In a recent upgrade, Mizuho analyst Dan Dolev said Toast could become profitable in 2023, a year ahead of schedule.

Of 17 brokerages covering the stock, 11 have a Buy or Strong Buy rating and the rest rate the shares at Hold. At a share price of around $19.00, the implied gain based on a median price target of $25.00 is 31.6%. Based on the high price target of $29.00, the upside potential for the stock is about 52.6%.

Analysts expect the company to report third-quarter revenue of $720.92 million, up 6.8% sequentially and by 48.2% year over year. Analysts also expect an adjusted loss per share of $0.11, better than the prior quarter’s loss of $0.19 and much better than the year-ago loss of $1.05 per share. For the full 2022 fiscal year, Toast is expected to post a loss per share of $0.38, smaller than last year’s loss of $0.82 per share, on revenue of $2.66 billion, up 55.8%.

Toast is not expected to post a profit until 2024. The enterprise value to sales multiple is expected to be 3.3 in 2022. Based on average estimated sales of $3.53 billion and $4.57 billion for 2023 and 2024, respectively, the multiple is 2.5 for 2023 and 1.9 for 2024. The stock’s 52-week trading range is $11.91 to $61.75. Toast does not pay a dividend, and total shareholder return for the past year is negative 68.7%.

Originally published at 24/7 Wall St.

By Paul Ausick