Aurora Cannabis Inc. (ACB) Shows Volatility: Technical and Fundamental Analysis Point to a Hold RecommendationStockInvest.us, 2 months ago
Aurora Cannabis Inc. (Ticker: ACB) saw a dip of -12.19% on September 18, 2023, closing at $0.86, which was below its 50-day moving average of $0.55 and above its 200-day moving average of $0.72. The daily high and low were $0.97 and $0.85, respectively. ACB's high for the year is $1.62, while its yearly low is $0.43.
Average trading volume for the stock is around 16.68 million shares, but on the last trading day, volume spiked to 42.37 million, indicating increased activity. The company's market cap currently sits at about $325.21 million.
Considering the Relative Strength Index (RSI) of 70, the stock appears to be close to the overbought territory, which could signal a downward price trend in the future. The Moving Average Convergence Divergence (MACD) of 0.02, however, indicates a bullish trend.
The average true range (ATR) is 12.48 which is typically used as a volatility indicator. The nearest support level resides at $0.84, with the next resistance level at $0.91.
Aurora Cannabis Inc. also known as ACB on the NASDAQ, is a Canadian licensed cannabis producer, with a diverse range of internationally based operations.
The company reported an Earnings per Share (EPS) of -$6.81, and with a PE ratio of -0.13, specified negative earnings.
While some recent news highlights suggest potential positives such as claiming to be close to cash-flow-positive and regulatory developments lifting the stock, there are concerns about the intention to raise $50 million through selling stocks that caused a decline in the stock price. It's also noteworthy that among the analyst ratings, the company received seven hold ratings and a single buy rating.
Based on the consensus target price projections, the median target is $8, and the stock is projected to trade between $1 to $8.75, with a consensus of $5.92.
FORECAST & RECOMMENDATION
In the short term, due to the technical signals such as the high RSI and increased volume, investors might see some price corrections. Yet, the MACD is indicating that there's an underlying bullish trend. The stock's price might likely test the support level of $0.84 in the next trading day, September 19, 2023.
For the upcoming week, the stock price may consolidate around its current levels given the mixed signals from technical indicators and the recent news about additional funding.
Considering the technical and fundamental analysis, and based on the analyst consensus, ACB is recommended as a "Hold". The company’s negative EPS and ambitious plans to raise funds raise some red flags. However, the company's potential for becoming cash-flow positive and optimistic target price projections provide a decent counterbalance to the perceived negatives.
Investors should monitor Aurora Cannabis Inc. closely, weighing the potential risks and rewards associated with the company's future performance. Potential investors should do their due diligence or consult with a financial advisor before making investment decisions.