Aurora Continues to Improve Profitability, but Risk for Equity Dilution Remains a Looming Threat

Aurora Cannabis cultivates and sells cannabis predominantly in Canada but also exports to the global medical market. It considers itself a medical cannabis company first, as adult use accounts for roughly 17% of fiscal 2024 net revenue, much less than peers. We expect its medical cannabis revenue to grow in the high single digits over the next 10 years, with robust international growth offsetting slower Canadian growth. We forecast Aurora's adult-use growth in the low single digits, driven by the conversion of illicit-market consumers into the legal market and new cannabis consumers. Still, we expect medical to constitute most of sales by 2034.