Hot out of the IPO gate, Tilray Inc. (TLRY) became one of the hottest pot stocks to own in 2018.
After pulling back from $33 to less than $22.50 after going public, TLRY exploded to a high of $300 a share. All as Canada neared approval of marijuana use in October 2018, and on very clear signs of interest from the corporate world.
While it has since pulled back to $76 a share with a broader market pullback, a one-of-a-kind deal with Big Pharma may set it up for another big run higher.
A New Global Partnership with Novartis
The Canadian marijuana grower just announced a global partnership with Sandoz AG, a division of Novartis to develop and distribute medical marijuana around the globe.
With the potential to enter into more markets, Tilray CEO Brendan Kennedy sees the opportunity as one that will inspire a great deal of confidence.
“It just made sense for us to reach an agreement with a company like Sandoz, which is known for its focus on patients, its reliable supply chain, a well-established sales force and a global distribution network,” Tilray Chief Executive Officer Brendan Kennedy said, as quoted by Bloomberg. “If a product comes into a pharmacy with the Sandoz logo co-branded on it, or if a pharmaceutical sales rep is talking to a physician about a product that’s branded as Tilray and Sandoz, it lends credibility to that product.”
And, according to analysts at Cowen, the partnership should help boost the top and bottom lines for TLRY moving forward.
However, that’s just one of several big catalysts.
For one, “Tilray has a defensible competitive position as an early leader, with its partnership with Privateer offering ability to leverage established and recognizable U.S. brands,” analysts at Cowen said in an August 2018 note.
The investment bank thinks Tilray can capture about 7.6% of the Canadian cannabis market.
Two, TLRY appeared to be in good shape at the time.
Not only does it have ample production capacity, it expected to have 912,000 sq. ft. of growing space by the close of 2018, it also had supply-agreements in British Columbia, Quebec, Manitoba, and Yukon with a medical marijuana agreement in place with Novartis. At 912,000 sq. ft., the company would be right behind Aphria Inc., which had over one million sq. ft. of growing space at the time.
Three, the company could have quite an advantage in the international cannabis market.
In 2016, the company became the first Canadian marijuana producer to export cannabis to Europe. Tilray currently exports medical marijuana to nine countries, most importantly including Germany. Many more countries could be added to the list.
And four, the company is making waves in the corporate world.
In fact, the Canadian pot producer announced it would supply marijuana to Nova Scotia Liquor. That follows news that global alcoholic drink giant Diageo is in talks with Canadian marijuana companies about investments or alliances.
TLRY also signed an agreement with the Ontario Cannabis Store (OCS).
In Ontario, Canada’s most populous province, the Ontario Cannabis Store is the sole online retailer of cannabis.
In short, there’s a good amount of opportunity in TLRY.