The Globe and Mail reports in its Wednesday, Nov. 18, edition that just eight days after ATB Capital Markets analyst David Kideckel downgraded Aurora Cannabis ($9.40) in response to strong share price appreciation following the U.S. presidential election. The Globe's David Leeder writes in the Eye On Equities column that Mr. Kideckel reversed course on Tuesday and upgraded the company to "sector perform" from "underperform," citing both its valuation and balance sheet strength.
Mr. Kideckel continues to target the shares at $10.50, which is one cent below the consensus. Mr. Kideckel says in a note: "We believe that Aurora Cannabis is trading below its intrinsic value after the recent correction in its stock price. Our investment thesis on Aurora is driven by three factors: (i) Aurora's ability to grow its revenue in-line with the overall Canadian cannabis industry, (ii) Aurora management's focus on profitability, (iii) Aurora's strong capital position. Following the raise, we estimate Aurora's cash position to be $476-million. We believe that having a strong cash position is one of Aurora's key advantages in this market scenario. ... We believe that Aurora's long-term sales growth outlook is positive."
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