Tilray Inc (NASDAQ:TLRY) earned a repeat ‘Buy’ rating from Jefferies analysts after what it described as a solid third quarter earnings report, pointing to improving fundamentals and increased visibility into the company’s medium-term outlook.
The brokerage reiterated a price target of $24, implying substantial upside if execution continues as expected. Shares traded up 8% at $6 on Thursday afternoon.
In the third quarter, Tilray reported revenue growth of 11.3%, exceeding expectations of roughly 7.5%. The performance was driven primarily by strength in the cannabis segment, where sales rose 19%, offsetting continued weakness in craft beer, which declined 24%.
Gross margins came in slightly below expectations, missing by around 150 basis points, though adjusted EBITDA was broadly in line at approximately $11 million.
The company reaffirmed its fiscal 2026 adjusted EBITDA guidance range of $62 million to $72 million, which Jefferies said implies stronger margin expansion in the fourth quarter.
Jefferies highlighted international cannabis operations as a key area of outperformance. Sales in that segment increased 73% year-over-year, well ahead of prior trends.
While foreign exchange contributed to the result, the firm noted that underlying growth remained strong, supported by supply chain improvements, increasing patient adoption, and expansion into newer markets.
Recent strategic developments were also viewed positively. Partnerships with Carlsberg and BrewDog are expected to strengthen Tilray’s platform and provide greater visibility into future growth.
Jefferies also incorporated the anticipated impact of the BrewDog transaction into its forecasts, estimating it could contribute roughly $200 million in revenue and between $6 million and $8 million in adjusted EBITDA by fiscal 2027.
Looking ahead, Jefferies expects fourth-quarter revenue of about $233 million and EBITDA of $39 million, with full-year projections of approximately $1.1 billion in revenue and $95 million in EBITDA.
The firm described the company’s near-term trajectory as positive, citing improved supply conditions and continued strength in higher-margin cannabis markets, particularly internationally, while noting that craft beer remains a softer segment and margins will continue to be closely watched.
In the longer-term, Jefferies believes Tilray is positioned to benefit from a more favorable product mix, international expansion, and potential regulatory changes in the United States.
The firm’s valuation is based on a 27x multiple applied to its fiscal 2027 EBITDA estimate of $95 million, reflecting confidence in the company’s ability to scale earnings over time while maintaining balance sheet flexibility for potential acquisitions.