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Tilray Brands Inc(TLRY-Q)

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This Cannabis Stock CEO Just Scooped Up Shares. Should You?

Barchart - Fri Jan 19, 2:18PM CST

Cannabis stocks have been attracting buzz in the early weeks of 2024, as the U.S. Drug Enforcement Administration (DEA) reviews marijuana for potential reclassification. If the drug is reclassified from Schedule I to Schedule III, it could have significantly positive implications for multi-state operators in the cannabis sector.

However, investors shouldn't forget about cannabis players north of the border, either. The CEO of Canada-based Tilray Brands (TLRY), a leading player in the cannabis industry, just made a big purchase of company stock. When company executives, board members, and stakeholders of 10% or more buy shares with their own money, it's known as insider buying - and it's generally viewed as a bullish signal for the stock. While investing legend Peter Lynch once observed that insiders might sell stock for any number of reasons, they typically buy shares only when they believe the price will rise.

With this in mind, here's a closer look at the latest insider buying on TLRY.

Insiders Buy TLRY Stock

On Jan. 12, Chairman and CEO Irwin Simon purchased 53,700 TLRY shares at $1.88 each, totaling approximately $100,956. Following the transaction, Simon's stake in Tilray stood at 0.27%.

Two other insiders also bought Tilray stock below $2.00 that same day, albeit in much smaller amounts - General Counsel Mitchell Gendel, and Chief Financial Officer Carl Merton.

More recently, on Jan. 16th, Gendel made another small purchase of 7,200 shares at $1.98, while Chief Strategy Officer Denise Menikheim Faltischek entered the fray with 10,000 shares at $2.05.

Prior to the flurry of activity in 2024, there are no noteworthy insider buys on Tilray, looking back over the past several years.

Why Is Tilray Stock Down?

Like other cannabis players, Tilray Brands has been navigating a turbulent market. Over the past year, the stock has declined 32%. Longer-term, the shares are down roughly 98% from their 2019 highs.

Currently, the company is valued at $1.41 billion by market cap.

Earlier this month, Tilray reported a mixed set of results for the second quarter of fiscal year 2024. While adjusted earnings topped Wall Street's expectations, the company's quarterly revenue fell short of forecasts - despite rising 34% to hit a record of $194 million.

Tilray has been proactive in diversifying its revenue streams, and beverage alcohol net revenue more than doubled during the quarter. The company's strategic acquisitions, such as the purchase of Montauk Brewing Co. and eight beer brands from Anheuser-Busch, have allowed it to reduce its reliance on the volatile cannabis market, where it remains a Canadian market share leader.

Additionally, its HEXO acquisition is expected to result in up to $35 million of annual savings, which should help to generate positive adjusted free cash flow.

What Do Analysts Expect for Tilray Stock?

Analysts expect Tilray Brands to report narrower losses and higher revenue in the years ahead. The consensus is predicting revenue of $813 million in 2024, a sizable 25% increase over fiscal 2023. The loss per share is expected to arrive at $0.17, an improvement of about 21% year-over-year.

For fiscal 2025, revenue is expected to increase another 9.7%, with losses narrowing further to $0.12 per share.

Wall Street is largely on the fence when it comes to TLRY shares. The company's stock is currently rated as a “Hold” by the majority of analysts, with 8 out of 12 backing this opinion. However, three analysts suggest a “Strong Buy,” while one analyst recommends a “Strong Sell.” 

The mean target price for TLRY is $2.57, which represents potential upside of approximately 29% from current levels.

On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

Provided Content: Content provided by Barchart. The Globe and Mail was not involved, and material was not reviewed prior to publication.

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