Aurora Breaks Out From Ascending Triangle After Peltz Engagement

Aurora Cannabis Inc. (ACB) shares rose more than 10% during Wednesday’s session after the company engaged billionaire Nelson Peltz to advise it on potential partnerships and global expansion plans. Peltz is best known for taking activist investment positions in The Procter & Gamble Company (PG), The Wendy's Company (WEN) and other corporate giants. 

GMP Securities analyst Marin Landry upgraded Aurora Cannabis stock from Hold to Buy and raised his price target to $15.00 following the new appointment, saying that Peltz could be "instrumental" in facilitating partnership talks with large consumer packaged goods companies. Landry added that the fully licensed Bradford and Aurora Sky facilities should alleviate inventory concerns.

Jefferies analyst Owen Bennett noted that Peltz could help Aurora focus on assets that yield the most value. In the past, some investors have criticized the company for excessive spending on numerous assets across the value chain with little apparent concern over the return on investment. Peltz could help support a focus on achieving profitability.

From a technical standpoint, Aurora Cannabis stock broke out from an ascending triangle chart pattern to briefly hit R2 resistance at $9.19 before turning lower. The relative strength index (RSI) approached overbought levels at 68.65, while the moving average convergence divergence (MACD) may have experienced a slight bearish crossover. These indicators suggest that traders should look for some consolidation before a further move higher.

Traders should watch for some consolidation above trendline and R1 support at $8.38 before the stock potentially makes another move higher. If the stock rebounds from those levels, traders could see a move toward R2 resistance at $9.19 or a long-term retest of reaction highs at $12.50. If the stock breaks back below support, traders should watch for the next key support level at trendline and pivot point levels near $7.52.

The author holds no position in the stock(s) mentioned except through passively managed index funds.