Tilray Brands (TLRY 5.02%) is far from perfect, but the Canada-based cannabis company's fundamentals have improved recently. Tilray has been successful at both carving a path toward steady profits and strengthening its balance sheet.
While commendable, improved fundamentals alone won't get this pot stock back into hyperdrive. Rather, it is progress on U.S. cannabis rescheduling that will continue to move the needle for shares.
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Why better fundamentals alone won't cut it
On April 1, when Tilray reported earnings for the third fiscal quarter of 2026 (ending Feb. 28), the company had much to celebrate. Even as overall net revenue and gross profit growth came in relatively modest, at 11% and 6%, respectively, Tilray reported strong results for its international cannabis business. This segment, consisting largely of Tilray's exports of medical-grade cannabis to Europe, reported 73% year-over-year sales growth last quarter. The company also reported a 19% year-over-year improvement in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), from $9 million to $10.7 million, and a significantly lower net loss of $25.2 million.
NASDAQ: TLRY
Key Data Points
Management also reiterated guidance for the fiscal year (ending June 30), forecasting an adjusted EBITDA range of $62 million to $72 million. Still, modest improvement isn't why the market values Tilray at around $630 million. The potential for Tilray to finally enter the U.S. remains the key factor.
Tilray's key catalyst remains elusive
Despite the recent chatter about the possible reclassification of marijuana from a Schedule I drug (indicating a high risk of abuse) to Schedule III (lower-dependency drugs with some accepted medical use) in the U.S., the timeline for full-on legalization of marijuana in the remains cloudy. Companies like Tilray need this to leverage their cultivation capacity and sell into the U.S. market.
Tilray shares will likely temporarily rally again on any rescheduling and/or legalization news. Still, there are other marijuana stocks, such as shares in companies that operate on the state level in the U.S., that have catalysts beyond just legalization and rescheduling. They may offer greater, clearer upside at this time.
