A Look at Tilray (NasdaqGS:TLRY) Valuation as U.S. Cannabis Rescheduling Hopes and Europe Growth Drive Sentiment

Tilray Brands (NasdaqGS:TLRY) has found itself in the spotlight as investors consider what comes next after a striking surge in its share price. The big trigger has been growing optimism that the U.S. government could reclassify cannabis from Schedule I to Schedule III, potentially opening doors to new market opportunities and easing regulatory hurdles. In addition, Tilray’s recent push into the European market with EU-GMP certified medical cannabis strains in Germany adds fuel to the speculation that the company could be entering a new phase of growth, even as some financial and operational bumps remain in play.

These shifts in sentiment have meaningfully changed how the market is viewing Tilray. Over the past few years, the stock has faced considerable challenges, reflected in its multi-year declines. However, with shares soaring nearly 200% in recent months, momentum appears to be building, despite a pullback over the past month. Recent events, such as the upcoming financial results and product launches for the fall season, have sustained interest, but it’s the regulatory news that has captured most of the investor attention recently.

After such a sharp run and so many moving parts, the question remains: Is Tilray Brands an undervalued pick poised to benefit from future growth, or has the market already priced in all the good news?

Most Popular Narrative: 16.9% Overvalued

According to the most widely followed narrative, Tilray Brands appears overvalued, currently trading at a 16.9% premium to its calculated fair value. This perspective blends expectations for global cannabis market expansion, improved operations, and ongoing regulatory developments.

Tilray's international cannabis business is achieving rapid organic growth, with European cannabis revenue up 112% YoY (excluding Australia) and significant share gains in Germany due to regulatory tailwinds, broader medical adoption, and expanding legalization. This supports a long runway for top-line revenue acceleration as global cannabis markets open.

Curious to know the driving force behind this high valuation? The most prominent narrative hinges on relentless international momentum, major growth bets, and profit margin improvement that few saw coming. The details behind these financial projections may surprise you. This is not the usual cannabis stock story.

Result: Fair Value of $0.98 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing regulatory uncertainty in the U.S. and persistent price competition in Canada could present challenges for Tilray's path to sustained earnings growth and market expansion.

Find out about the key risks to this Tilray Brands narrative.

Another View: How Does the SWS DCF Model Compare?

While market narratives focus on future growth and multiples, our DCF model offers a different perspective. This method suggests Tilray Brands could be undervalued and presents a very different story about the stock’s potential. Which approach better reflects reality?

Look into how the SWS DCF model arrives at its fair value.

Stay updated when valuation signals shift by adding Tilray Brands to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Tilray Brands Narrative

If you see things differently or want to reach your own conclusions, you can dig into the numbers and build your own perspective in just a few minutes. Do it your way.

A great starting point for your Tilray Brands research is our analysis highlighting 1 key reward and 3 important warning signs that could impact your investment decision.

Looking for More Investment Ideas?

Smart investors stay ahead of the curve by searching for opportunities others might overlook. Put yourself in front of the next big trend with these handpicked ideas:

• Capture impressive yields and steady income by checking out dividend champions among the dividend stocks with yields > 3%, which offer payouts that consistently beat the market average.
• Spot rising stars in artificial intelligence by tapping into the wave of AI penny stocks powering today’s innovations and tomorrow’s breakthroughs.
• Secure smart value buys using our tool for undervalued stocks based on cash flows that highlights stocks trading at compelling discounts to their true worth.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com