"The company's argument is that Canada will soon see oversupply and Canada will be insignificant anyway compared to the EU and US opportunity," Jefferies analyst Owen Bennett said in a note out Tuesday, citing comments from Tilray's management during the company's fourth-quarter earnings call.
"We think this is a risky strategy near term given its multiple, especially as investors will be increasingly looking to Canada as evidence of a company's ability to execute, and international is yet to contribute in any material way to sales and yet costs are weighing (the company not breaking out the international contribution is also not helpful)," Bennett added.
Tilray debuted for trading on the Nasdaq in July, becoming the first cannabis company to have an initial public offering in the US. Since then, it has sped up expanding its business globally.
In December, Tilray announced a partnership with a division of the Swiss drug giant Novartis AG, hoping to commercialize its non-smokable medical-cannabis products, develop new products, and educate pharmacists and physicians about cannabis.
In February, Tilray acquired Manitoba Harvest, the world's largest hemp food company. Under the Manitoba Harvest brand, Tilray is selling hemp foods over 16,000 stores across the US and Canada.
But Bennett says the company is overconfident about global markets.
"We also think Tilray could be overestimating the size of the US hemp CBD market which they quote as a $22bn opportunity (it was estimated at only $390mn in 2018)," he said.
Bennett has an underperform rating and $61 price target -16% below where shares settled on Monday.
Tilray shares were little changed this year through Monday.
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