The global medical cannabis market is experiencing significant growth, driven by increasing legalization, expanding research and rising demand for alternative pain management solutions. Projected to witness a CAGR of 22.5% from 2025 to 2035, the industry presents a highly favorable landscape for companies like Aurora Cannabis ACB. With the growing demand for cannabinoid-based therapies and continuous advancements in clinical research, the company’s focus on medical cannabis innovation and strategic partnerships with healthcare providers could further strengthen its dominance in the sector.

Despite several industry-wide challenges, including pricing pressures, regulatory hurdles and competition, Aurora Cannabis distinguishes itself well from its peers like Canopy Growth Corporation CGC and Organigram Holdings Inc. OGI based on the three following factors.

Strategic Expansion in Global Medical Cannabis Markets

Aurora Cannabis capitalizes on the rapidly evolving medical cannabis landscape, leveraging its EU GMP-certified manufacturing facilities, advanced genetics, and deep regulatory knowledge to expand its presence in established markets, such as Canada, Europe and Australia while entering new ones as they open. International revenues in the third quarter of fiscal 2025 jumped 112% year over year. For the second consecutive quarter, international revenues surpassed Canadian medical cannabis, comprising 60% of global medical cannabis net revenues.

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Operational Excellence and High-Margin Focus

By maintaining a strong emphasis on efficiency and cost optimization, ACB sustains an enviable margin profile, particularly in the medical cannabis segment, which remains the most profitable within the industry. In the fiscal third quarter, Medical Cannabis, ACB’s flagship business, generated 77% of total net revenues and 90% of adjusted gross profit. Bevo, the high-margin plant propagation business, registered a revenue increase of 22% year over year through organic growth and enhanced facility utilization.

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Financial Strength

Aurora Cannabis continues to reinforce its balance sheet, ensuring financial flexibility while prioritizing sustainable and profitable growth, as demonstrated by its record adjusted EBITDA. Net income and adjusted EBITDA both reached all-time highs in the fiscal third quarter. The company also generated $27 million in positive free cash flow.

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ACB shares have been performing impressively, capitalizing on all the above factors. Its shares have rallied 20.6% in a year, outperforming the industry’s 10.8% growth, the sector’s 6.9% decline and the S&P 500’s increase of 11.6%. Its direct peers, like CGC and OGI, have lost 69.2% and 51.8%, respectively, over the same period.

One-Year Price Comparison

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Despite the stock doing well, it remains quite undervalued, trading at a trailing 12-month Price to Sales (P/S) ratio of 0.95, which is significantly lower than the broader industry average of 6.03, implying that it is a good opportunity to buy.

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A Buy Opportunity Now

Aurora Cannabis presents a compelling investment opportunity for investors banking on its strong positioning in the global medical cannabis market, operational efficiency and financial resilience. Particularly, ACB’s focus on high-margin medical cannabis, cost optimization and improving profitability evidenced by its record adjusted EBITDA demonstrates its ability to sustain growth over the longer term.

Despite all these tailwinds, ACB stock appears hugely discounted at current levels, making it a Zacks Rank #2 (Buy) for now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Canopy Growth Corporation (CGC) : Free Stock Analysis Report

Aurora Cannabis Inc. (ACB) : Free Stock Analysis Report

Organigram Holdings Inc. (OGI) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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