Tilray Earnings: Decent End to Fiscal 2024, but We See Limited Risk-Adjusted Upside

No-moat Tilray closed its May-ended fiscal 2024 on a decent note, with full-year net revenue of $789 million that beat our forecast of $754 million. However, the adjusted gross margin erosion in the year for both alcoholic beverages (to 46% from 53%) and cannabis (to 36% from 51%) was slightly worse than we had expected. Looking ahead, for fiscal 2025, Tilray has guided net revenue to be between $950 million and $1 billion, with mid-single-digit organic growth and beverages continuing to become a bigger part of sales. Our preresults forecast included high-single-digit organic growth, and we’re not sure where the rest of the 24% implied by management’s target comes from. We don’t expect to change our fair value estimates of $2/CAD 2.70 per share materially. Shares look fairly valued, and we see more attractive risk-adjusted upside in no-moat US multistate operators Curaleaf and Green Thumb.