Tilray was double upgraded at Cantor Fitzgerald: should you buy TLRY now?

Shares of medical cannabis company Tilray Inc. (NASDAQ:TLRY) on Thursday gained 3.79% after Cantor Fitzgerald analyst Pablo Zuanic upgraded the stock to a buy rating. TLRY stock is now up 18.30% this month and is still far from Zuanic’s lower price target of $22.00 per share. Tilray price per share is still more than 87% below its all-time highs of about $150.00 reached in 2018. This indicates that in the long term, there is significant upside potential.

Why Tilray got its upgrade

The company’s latest upgrade comes following the completion of a merger with its fellow Canadian cannabis company Aphria. The two combined will now become the largest marijuana company in the world with annual revenue of about $179 million (£126 million). The merger strengthens Tilray’s position both in Canada’s domestic cannabis market and internationally.

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From a valuation perspective, Tilray stock looks expensively valued at a price-sales (P/S) ratio of 14.40. This implies that there is little room left to run unless another wave of speculation hits the cannabis industry. However, its merger with Aphria boosts TLRY’s long-term outlook with the potential to dominate the market in the coming years. This could convince investors to pay a higher premium on TLRY shares. In the company’s most recent quarterly results, Tilray delivered a bullish earnings surprise of more than 73%.

Technical Overview

Technically, Tilray shares appear to be facing resistance from the 100-day moving average. If they can break above this level, then there is significant upside potential. The stock is closer to the overbought levels of the 14-day RSI. 

Investors can target long-term profits at around $29.56. Should another wave of bullish sentiment sweep the industry, then targeting long-term profits at $40.55 becomes more feasible. Key support levels can be found at $13.78 and $4.74 should the market experience another crash.

Bottom line: Tilray looks expensively priced but exciting in the long-term

Tilray shares look very expensive at a 14.40 P/S ratio. However, the cannabis industry is still in its early stages, with several business verticals to drive growth. Tilray’s recent merger with Aphria gives it the best platform to capitalize. The stock could pullback in the short term, which would create better entry opportunities.