Mixed Signals for Tilray: Record Revenue Meets Analyst Caution

Tilray Brands, Inc. has reported its highest-ever second-quarter sales, yet a cloud of skepticism continues to hang over the stock according to the majority of market analysts. While the share price has seen substantial gains in recent months, the prevailing consensus rating remains a cautious "Reduce." The primary concerns center on persistent profitability challenges and an uncertain regulatory landscape, particularly in the United States.

Coverage of Tilray's equity reveals a guarded outlook. Among the seven brokerages currently providing ratings, the average recommendation stands at "Reduce." This breakdown includes two sell ratings, four hold recommendations, and a single buy vote. The collective 12-month price target averages $15, which sits above the current trading level but underscores the pervasive wariness within the cannabis sector.

Recent Adjustments to Ratings and Targets

• On January 13, Zacks Research downgraded its stance from "Hold" to "Strong Sell."
• Roth Capital Markets reaffirmed its "Neutral" rating on January 16 but executed a sharp reduction in its price target, cutting it from $20 to $10.
• A more positive move came from ATB Cap Markets on December 10, 2025, which upgraded the stock from "Strong Sell" to "Hold."

Roth Capital analyst Bill Kirk highlighted ongoing uncertainty regarding U.S. federal legislation and additional regulatory risks linked to intoxicating hemp-derived products. While acknowledging the company's progress in revenue and operational development, he assigns greater weight to the political and regulatory overhang.

Quarterly Results: Record Sales Contrast with Profitability Gap

The company released its Q2 2026 fiscal year results on January 8. Revenue climbed to $217.5 million, surpassing the consensus estimate of $211.15 million and marking a record for a second fiscal quarter.

However, the bottom line told a different story. The loss per share was reported at $0.41, a figure significantly wider than the average analyst expectation of a $0.14 loss. This disparity continues to spotlight profitability as the key weakness.

Segment Performance Breakdown

• International Cannabis: Revenue of $20.2 million, a 36% year-over-year increase.
• Canadian Cannabis: Revenue of $62.4 million, up 6%.
• Distribution (CC Pharma): Revenue of $85.3 million, a 26% gain.
• Beverage Alcohol: Revenue of $50.1 million, a decline of 20.6%.

The gross margin contracted to 26.4%, representing a decline of 260 basis points year-over-year and 100 basis points sequentially. A positive note was the approximate halving of the net loss to $43.5 million, compared to $85.3 million in the prior-year quarter.

International Markets Fuel Growth Engine

The international cannabis segment emerged as a standout performer, with revenue surging 36% from the prior year and 51% from the preceding quarter. Management has intentionally scaled back Canadian wholesale volumes to redirect capacity toward higher-margin international markets.

With an annual cultivation capacity now around 200 metric tons, Tilray is positioned to supply new, fast-growing markets while leveraging economies of scale. In Europe, the company ranks among the larger suppliers, utilizing experience and infrastructure developed in Canada for further expansion.

Positioning for the U.S. Market via Tilray Medical USA

Following the rescheduling of cannabis to Schedule III via an Executive Order by President Trump in 2025, Tilray has accelerated its U.S. market entry through Tilray Medical USA. The new regulatory framework provides several advantages:
- Improved access to financial services
- Broader opportunities for medical research
- The ability to deduct standard business expenses for tax purposes

Should investors sell immediately? Or is it worth buying Tilray?

These changes create a better foundation for structured growth in the U.S., though the political and regulatory path forward remains uncertain.

Financial Health and Profitability Outlook

The balance sheet has shown marked improvement. Tilray now reports a net cash position, a stark turnaround from the net debt of $434 million on its books in Q2 of fiscal 2024. The at-the-market (ATM) equity program is complete, and Roth's Bill Kirk notes that without acquisitions, further shareholder dilution is not expected in the near term.

For the full 2026 fiscal year, management reaffirmed its guidance for adjusted EBITDA in the range of $62 million to $72 million. This compares to an adjusted EBITDA of approximately $55 million in fiscal 2025.

Valuation and Trading Context

Over the past six months, Tilray shares have advanced 40.4%, significantly outperforming the broader cannabis sector, which declined 6.6% over the same period.

Key Valuation and Trading Metrics:
- Forward Price-to-Sales (12-month): 1.22x
- 52-Week Range: $3.51 – $23.20
- 50-Day Moving Average: $9.73
- 200-Day Moving Average: $10.84
- Market Capitalization: Approximately $1.1 billion

Despite the recent rally, the stock trades below its long-term valuation average and the industry P/S multiple, which stands around 2.81x.

Forecasts and Prevailing Headwinds

Analysts project revenue of roughly $870.8 million and adjusted EBITDA of about $63.2 million for fiscal 2026. For 2027, forecasts call for revenue of $926.5 million and adjusted EBITDA rising to approximately $87.5 million.

These projections are tempered by several identifiable challenges:
- A declining beverage alcohol business with significant revenue contraction.
- A potential regulatory risk from a proposed U.S. ban on intoxicating hemp products effective at the end of 2026.
- An 80% drop in wholesale sales in Q2, with that volume slated for gradual redirection to international markets.

The critical factor for upcoming quarters will be whether Tilray can successfully convert its international expansion and stronger balance sheet into meaningfully higher margins and a sustainable trend toward profitability.