Tilray is progressively more unprofitable, says report

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Cowen analysts give Tilray high ratings while lowering their future revenue estimates for the stock

Tilray Inc NASDAQ: TLRY reported a net loss during the third quarter of 2018 that was 10-times higher than the size of the loss during the same period in 2017. According to a recent report published on Pot Network, Tilray’ stock price is overvalued and becoming progressively more unprofitable.

By the numbers, Tilray reported third-quarter net losses of $18.7 million this year and was down .20 earnings per share. For the same period last year, the stock reported $1.8 million in net losses and was down 0.2 earnings per share.

Despite the numbers and the stock’s declining profitability, leading analysts continue to give it high ratings. Vivien Azer at Cowen rated Tilray at “outperform” while other still list it as “buy.” According to Cowen, their rating of Tilray is not based on international revenue but on the fact that the company is positioned as a strong global player.

At the same time, Cowen lowered Tilray’s target price to $150 per share from $172 and lowered their revenue estimate for the company’s 2018 fiscal year from $41.6 million down to $39.9 million. Cowen reduced its future projections for Tilray by an even greater projection, lowering its fiscal 2019 estimate from $145 million down to $119 million.

One explanation for the continued buy rating is that it is common for early-stage growth companies to experience losses before they are able to optimize operational costs. In other words, the company’s value can still increase through revenue from investments and the net losses might not be a reason for concern.