Tilray Faces Steep Valuation Cut Amid Sector Headwinds

Tilray US88688T1007

Shares of Tilray Brands are under significant pressure, with a recent reverse stock split failing to provide the anticipated boost. Instead of gaining momentum, investors are contending with a declining share price and a severe price target reduction from analysts at TD Cowen. The cannabis and beverage conglomerate is navigating a challenging landscape, raising questions about its near-term trajectory.

From a fundamental perspective, Tilray has shown some operational improvement. For the first quarter of its fiscal year 2026, the company returned to profitability, posting a net income of $1.5 million. This marks a substantial turnaround from the prior year's loss of nearly $35 million. Revenue also saw growth, climbing five percent to reach $210 million. However, these positive signals are being outweighed by broader sector uncertainties, including stalled progress toward federal cannabis legalization in the United States and intense competitive pressures.

Analyst Slashes Price Target in Major Downgrade

The company's challenges were underscored by a stark reassessment from TD Cowen. Analyst Robert Moskow drastically reduced his price target for Tilray shares. The new target is set at just $10.00, a sharp cut from the split-adjusted previous target of $25.00. While Moskow maintained a "Buy" recommendation on the stock, the basis for his valuation has deteriorated considerably. He cited two primary factors for the adjustment: persistent difficulties in Tilray's craft beer segment, where it is the fourth-largest player in the U.S., and ongoing struggles in its core Canadian cannabis business, which faces market saturation and relentless price compression. The revised target now reflects a significantly lower valuation multiple.

Reverse Split Fails to Impress the Market

This bearish analysis arrives during a fragile period for the equity. The company executed a 1-for-10 reverse stock split on December 2nd, an action intended to consolidate the number of outstanding shares to approximately 116 million and enhance the stock's appeal to institutional investors. Contrary to management's hopes, the market reaction has been negative. Since the reverse split took effect, the value of the shares has fallen by approximately 9.6 percent. Recently trading at $7.22, the stock remains far below its split-adjusted 52-week high of $23.20.

All eyes are now on January 8, 2026, when Tilray is scheduled to release its second-quarter fiscal 2026 results. This upcoming report will be a critical test, indicating whether the company can sustain its path to profitability despite the formidable headwinds facing its core industries.