Licensed producer (LP) Aurora Cannabis Inc.’s stock is set to drop to just $1, according to one analyst.

Michael Lavery of Piper Sandler sent a note to clients on Jan. 9, downgrading the Canadian cannabis giant to what amounts to a sell, and lowering the target price from $3 to $1.

Lavery noted weak sales in Europe and cash-related risks as substantial contributors to the note, as the company’s stock plummeted 4.3 per cent to $1.86 during Thursday’s session.

The struggling LP has shown signs of trouble for some time now, selling assets like its massive Exeter, Ont. greenhouse and halting construction on a much-hyped new facility in Medicine Hat, Alberta that less than a year ago was touted as being an economic and employment boon for the local community.

“German sales have been its highest priced and highest margin products, so the suspension of sales there hurts its revenue and margin mix.”

The company faced further issues when its much-anticipated medical cannabis sales in Germany were halted, pending a review by German health authorities “until further notice.”

“Aurora built its large capacity in Canada with expectations to export a significant amount internationally, but these sales have been very slow to materialize,” Lavery wrote in the note. “German sales have been its highest priced and highest margin products, so the suspension of sales there hurts its revenue and margin mix,” he added.

Lavery noted he does not expect that Aurora will attain a positive cash flow from its production operations until late 2021. / Photo: monsitj / iStock / Getty Images Plus monsitj / iStock / Getty Images Plus

Lavery noted he does not expect that Aurora will attain a positive cash flow from its production operations until late 2021, predicting a cash deficit of $200 million in the meantime, likely forcing the cannabis behemoth to refinance its whopping $360 million debt, due for repayment in August 2021.

This would leave the company with just $30 million in cash and $800 million in debt in the second quarter of the fiscal 2022 year.

Investors’ short-term hopes are now pinned on the LP’s second-wave cannabis offerings, although it has indefinitely halted its rollout of liquid vape products.