(Changes sourcing, updates shares, adds details from note)
** Cannabis cultivator and retailer’s Toronto-listed shares down 6.4%
** BofA Merrill Lynch cuts Aurora to “neutral”, citing cash burn
** Brokerage estimates Aurora could be cash negative by Q1 2020 if co doesn’t get financing, especially with C$230 mln obligation coming due
** ACB would need funding in the next few quarters as capex has trended higher to fund facility expansions
** Thinks ACB’s U.S. expansion could, if debt is added and no partner found, require other uses of financing like equity (capital raises or deals)
** Still, Aurora has emerged as one of the best operators in the cannabis sector, with industry leading scale and margins even vs other large peers, and global optionality, brokerage says
** BofA cuts PT on TSX-listed shares to C$11 from C$13; median target price is C$15
** Also reduces PT on NYSE-listed to $8 from $10; median PT is $9
** 9 of 14 brokerages rate the stock “buy” or higher, 4 “hold” and 1 “sell”
** The second-largest cannabis company’s Canadian shares had risen 33.4% this year, compared with a 18.5% increase in shares of leader Canopy Growth Corp (Reporting by Arathy S Nair in Bengaluru)
