Aurora Cannabis Stock Rises 30% YTD: Time to Buy or Sell?

Despite a declining share price over the last few years, Canada-based Aurora Cannabis ACB has staged a strong rally this year, all thanks to encouraging third-quarter fiscal 2025 (year ending March 2025) results.

Aurora’s quarterly earnings and sales surpassed our consensus estimates, capitalizing on the rapidly evolving medical cannabis landscape. However, long-term investors do not bother much about a single quarter’s results and instead focus on strong fundamentals.

Let’s delve into the company’s fundamentals to gain a better understanding of how to play the stock amid this price increase.

ACB’s Strategic Shift to Medical Cannabis Shows Promise

Aurora, which operates in both medical and consumer cannabis markets, sells a range of products across Canada, Europe and Australia. While the company’s medical offerings include dried cannabis, oils, capsules and topical treatments, it also markets cannabis accessories, such as vaporizers and grinders.

In its third-quarter results of fiscal 2025, Aurora’s medical cannabis revenues rose 51% year over year to C$68.1 million. Revenues from this segment accounted for more than 75% of ACB’s total revenues.

Per Aurora, sales from its international medical marijuana business more than doubled to $40.9 million during the quarter. The company’s focus on global markets, particularly in Australia, Germany, Poland and the U.K., is crucial as it navigates the rising competition in Canada.

The higher sales also helped improve adjusted gross margin numbers for the medical cannabis segment, which climbed to an impressive 74% compared to the 63% in the year-ago period. This improvement was driven by higher selling prices, cost reductions and enhanced production efficiencies. These higher margins enabled Aurora to swing from a loss last year to a profit in the latest quarter.

Looking ahead, Aurora expects international medical cannabis sales to continue growing in the fiscal fourth quarter, supporting its overall topline. The global medical cannabis market is projected to surpass the $130 billion mark by the end of 2032, primarily driven by the increasing acceptance of cannabis for therapeutic purposes.

Aurora’s Faltering Consumer Biz

While medical cannabis has delivered record growth, Aurora’s consumer business continues to struggle. Revenues from the recreational cannabis segment declined year over year, largely due to intensified competition, price compression, and regulatory challenges within the Canadian market. These factors have made it difficult for Aurora to maintain pricing power and brand differentiation in a saturated landscape.

Aurora has significantly scaled back its exposure to the low-margin consumer segment over recent years. The company has shut down underperforming facilities, reduced headcount and prioritized profitability over market share in the consumer market. Per the company, these moves intend to streamline operations and focus on the more profitable medical segment.

Other Players in the Cannabis Space

Aurora is targeting an overcrowded market. It faces stiff competition from its peers like Canopy Growth CGC and Tilray Brands TLRY. Both CGC and TLRY are also pursuing international expansion and cost optimization strategies, making the competitive landscape even tougher.

As Aurora gains traction in international markets — especially in Europe and Australia — it is likely to draw increased attention from Canopy Growth and Tilray Brands. This could lead to more aggressive moves from these peers and possibly further consolidation in the sector.

ACB Stock Performance and Estimates

Shares of Aurora Cannabishave gained 30% year to date compared with the industry’s 5% rise, as seen in the chart below.

Estimates for ACB’s EPS for 2025 and 2026 have been consistent in the last 60 days.

How to Play ACB Stock?

While ACB’s recent rally reflects renewed investor optimism, investors may want to hold off on initiating or adding to positions until the company reports its fiscal fourth-quarter results. The next earnings report will offer more clarity on the sustainability of its international momentum and whether Aurora can continue expanding margins amid ongoing headwinds in the consumer segment. The consistent EPS estimates suggest that analysts remain cautious about the near-term upside for this Zacks Rank #3 (Hold) company.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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